The United States is one of the most prominent players in the maritime industry. Almost every state in the country has significant ports. The United States is in the middle of the North Pacific route and North Atlantic route, which are the first and the second biggest routes by trade value in the world. As a result, the United States is one of the most important markets for the marine industry and bunker fuel industry. Bunker fuel is the general term given to any fuel poured into a ship’s bunker to power its engine. The United States bunker fuel market is expected to grow at a CAGR of more than 10% over the forecast period. The market is driven by rising maritime transportation of essential commodities, implementation of the stricter environmental regulations driving the demand for cleaner bunker fuels, and the increase in the use of marine vessels for offshore oil and gas developments. However, the trade tension began between the United States and China in 2018 due to the setting of high tariffs and other trade barriers, which is expected to restrain the market.
Key Highlights
- Very-low Sulfur Fuel Oil (VLSFO) segment is expected to have significant growth in the Unites States bunker fuel market over the forecast period.
- Methanol is a safe, cost-efficient fuel. With the growing demand for cleaner marine fuel, methanol is an alternative fuel for ships that helps the shipping industry meet increasingly strict emissions regulations, which in turn is likely to provide an opportunity for the market in the future.
- Growth of natural gas trade is likely to drive the United States bunker fuel market during the forecast period.
Key Market Trends
Very-Low Sulfur Fuel Oil (VLSFO) Segment is Expected to Witness Significant Growth
- The refining industry players in the country have indicated that they have enough infrastructure to meet the low-Sulphur conventional fuel requirements according to IMO regulations. The LNG bunkering infrastructure in the country is also relatively un-developed. Hence, the conventional fuel is expected to maintain the dominance in the bunker fuel industry during the forecast period.
- Marine fuel containing less than 0.5% of sulfur is generally termed as very-low sulfur fuel oil. Very-low sulfur fuel oil did not witness demand as a bunker fuel till 2019. However, the deadline for IMO 2020 led to an increase in the demand for VLSFO. From January 1, 2020, HSFO can only be used in ships having scrubbers installed to reduce the emissions.
- Most of the high-sulfur fuel oil (HSFO) bunker fuel market is expected to be shortly replaced by low-sulfur alternatives. Most of the VLSFO available in the market is blended from residual and distillate components, which are blended with numerous cutters of varying sulfur and viscosity to create an on-specification product.
- The demand for VLSFO witnessed a significant growth since January 2020, due to the IMO 2020 Regulations coming into effect. However, due to the weak demand caused by the outbreak of COVID-19, the price, as well as the demand for VLSFO, declined.
- Moreover, the demand for VLSFO is expected to rise with the control of the outbreak in the major import and export countries, like China and the United States. The demand for VLSFO is expected to revive after mid-2021. Post 2020, the demand is likely to rise on account of opening of all the trade routes and relative price rise.
Growth of Natural Gas Trade is Likely to Drive the Market
- LNG or natural gas is a cleaner form of energy emitting lesser carbon particles than other petroleum products or other fossil fuels, like coal.
- With an increasing consumption rate of natural gas, on account of mounting environmental concerns in the United States, is expected to ramp up production capacities of their oil and gas fields. The United States' natural gas consumption in 2019 was about 846.6 billion cubic meters, the highest annual amount recorded.
- Technology, such as unconventional directional drilling techniques, supported the United States to increase the production volume of shale gas from basins, like Marcellus and Permian basins. Moreover, the United States planned to be a net exporter of energy by 2020, including the export of petroleum products, natural gas, coal, and coke.
- Thus, the factors mentioned above are likely to act as a driver for the growth of natural gas trade in the country. This, in turn, would increase cleaner vessel movements. Thus, it would support the bunker fuel market’s growth during the forecast period.
Competitive Landscape
The United States bunker fuel market is moderately consolidated. Some of the major players in the market include Exxon Mobil Corporation, Royal Dutch Shell PLC, Chevron Corporation, Clipper Oil Company, and NuStar Energy L.P.
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