World Bunkering > News > Autumn 2009 > The long way round

Although international action against piracy off the Horn of Africa has apparently had some impact on the rate of hijackings, there is no doubt that more vessels have been using the Cape route in recent months, due mainly to a wish to avoid the Gulf of Aden. Several big shipping companies have announced they will be using the Cape route, at least for some of their vessels, including AP Moller.

One significant player in the South African market reports that volumes have definitely increased in the first six months of the year. In March this year, there were 100 bunkers-only calls: well up on previous years. Cape Town, he says, has also been busier.

The view appears to be that the general downturn in shipping has had an effect in South Africa. For example, vessels can be seen laying idle at anchor off the coast. However, there has been an overall increase in bunker demand of about 10% due to the piracy factor.

Russell Burns, ceo of Unical Bunker Services, a subsidiary of Grindrod, has been quoted as confirming the increase in sales of bunker fuel, which he attributes partly to lower fuel prices making the Cape route a less expensive option than previously.

The third quarter, however, was beginning to look different, according to one source, with a marked slowdown.

Increasing bunker arrests in Durban are a sign that South Africa is far from immune from the downturn. Several bunker suppliers are understood to have suffered bad debts recently while bunker suppliers from overseas have also been attracted to South Africa as a place to arrest vessels. The country’s maritime law makes it a preferred place to arrest vessels.

Availbility struggles

Availability has long been an issue in the South African market and particularly at Durban, the country’s biggest bunker port, where the barge fleet struggles to meet demand. The situation has been made worse by the decommissioning of the pipelines that have been in use until recently. At present pipelines are still being used in Cape Town. August should see some improvement as Unical’s third bunker barge comes into service.

Smit Amandla also operates bunker barges at Durban, normally the Pentow Energy and Marine Excellence in the Port of Durban. Its other barge, the Smit Bongani is usually based at Richards Bay. The latter vessel has been out of service recently while being fitted with a double hull to meet current requirements. This temporary reduction in barge capacity has prompted press reports that Indian coal buyers were avoiding shipping from Richards Bay Coal Terminal, largely because of delays in bunkering.

A change is taking place in the Durban market where there is a move away from the almost entirely contract bunker market to more spot.

Market sources in Cape Town claim that in some ways the situation is better than in Durban, although bunker volumes at the port are only about half of Durban’s two million tonnes a year. One Cape Town supplier told World Bunkering: “Bunker calls are handled very efficiently. We haven’t been ‘dry’ in the past two and half years, while there have been occasions when Durban couldn’t quote on the spot market. Against that, though, Cape Town prices are higher.”

Other than when ships divert from the Suez route there is little scope for expansion of the South African bunker market. It is difficult for its suppliers to take trade from its main competitors, notably Las Palmas. Sometimes, South Africa looks competitive compared to South American East Coast suppliers.

At present there is no demand for low-sulphur supplies, which is just as well as the consensus seems to be that providing low-sulphur fuel would be a huge challenge for the country’s refineries, requiring massive investment.