Market Trends of United Kingdom Bunker Fuel Industry
This section covers the major market trends shaping the UK Bunker Fuel Market according to our research experts:
Very Low Sulphur Fuel Oil (VLSFO) to Witness Significant Growth
- Very Low Sulfur Fuel Oil (VLSFO) is expected to witness significant growth in the forecast period, owing to factors like IMO 2020 regulations that came into effect on 1st January 2020, and rising environmental concerns over high greenhouse gases emissions from the marine sector.
- The demand for VLSFO saw a steady growth since 2019 and a significant increase since January 2020 due to the IMO 2020 Regulations coming into effect.
- Major players of the region such as Allantone Supplies Limited, ConocoPhillips Ltd., ExxonMobil, GB Oils Ltd., etc. had started the supply of VLSFO ahead of the imposition of IMO 2020.
- In 2020, the United Kingdom bunker supplier Greenergy has merged with BG fuels for the expansion of the company in European bunker fuel. BG fuels have chartered two new barges to operate in the United Kingdom bunker fuel market with the latest IMO 2020 regulation.
- Moreover, High Sulphur fuel oil (HSFO) has remained the most common fuel used in the shipping industry until 2019. Furthermore, in 2020, the crude price also collapsed, which promote many shipowners to buy more bunker fuel for storage purposes,s which double the sales of marine fuel in the United Kingdom.
- Therefore, with the increase in the demand for cleaner fuel and the implementation of IMO 2020 Regulations, shallow sulfur fuel oil (VLSFO) is expected to rise significantly in the forecast period.
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Government Policies and Increase in Maritime Trade to Drive the Market
- The United Kingdom has a long maritime history and is expected to be the most significant naval sector in Europe, resulting in increased concerns for maritime emissions as compared to other countries of Europe.
- Furthermore, after the implementation of Brexit, trade movement between the United Kingdom and other regions is expected to increase further. Moreover, the United Kingdom Continental Shelf (UKCS) region is expected to become one of the most active offshore areas for maritime transport, which is likely to boost the bunker fuel market in the country.
- As of 2019, the United Kingdom is one of the world's top 10 exporters in terms of the value of goods exported. The United Kingdom exported USD 469.2 billion worth of goods around the globe, in 2019, amongst which over 3/4th of the exports are done through sea route.
- Some of the significant firms providing bunker fuels in the country, including Greenergy and Maersk, started the supply of VLSFO in the fourth quarter of 2019, before the imposition of IMO 2020. This led to the oversupply of HSFO in the market owing to delay in the installation of scrubber systems and increasing usage of VLSFO.
- To implement a sustainable and environmentally friendly transport network, the United Kingdom government, along with various oil and gas and shipping operators, has promoted the use of LNG powered marine transport.
- Although only a limited number of ships currently bunker with LNG in the United Kingdom, it is expected to witness significant demand, as regulation to meet International Maritime Organization and European Union's 2020 emission standard increases.
- Therefore, factors such as government policies, marine transport, and IMO regulation are expected to drive the bunker fuel market.
