Bankruptcy Rattles Singapore Fuel Market as Traders Left Short
Time：2014-11-12
Browse：139
There will be minimal disruption to the fuel market in the Asian nation, where there are 60 suppliers and OW Bunker accounted for less than three percent of total sales last year, according to the Maritime and Port Authority of Singapore. SK Innovation Co. (096770) and GS Caltex Corp., South Korean refiners, said they are affected by the bankruptcy of Noerresundby, Denmark-based OW Bunker and declined to provide further details.
OW Bunker lost $275 million through a combination of fraud committed by senior executives at its Singapore office and poor risk management, the company said last week. Trading in its shares was suspended Nov. 5 and the company declared bankruptcy Nov. 7 and said its banks had refused to provide more credit.
“Traders and shipping companies were found scrambling to source fuel supply last week,” said Jit Yang Lim, a Singapore-based senior consultant at KBC Energy Economics. “It’s quite possible that some small companies that traded with OW Bunker may struggle.”
December 380-centistoke fuel oil swaps in Singapore cost $4 a metric ton more than the January contract, according to PVM Oil Associates Ltd., a London-based broker. The so-called backwardation rose for a third day to the highest since Sept. 10, indicating increased demand or reduced supply of the shipping fuel.
Price Increase
“Many bunker players in Singapore have business with OW Bunker,” said Oliver Imaizumi, who manages shipping fuel supplies in Singapore for Sumitomo Corp., Japan’s third-largest trading company. “This is pushing up prices. Everyone is very cautious now.”
Hin Leong Trading Pte., a fuel supplier, sued OW Bunker Far East (Singapore) Pte. on Nov. 8 in the city-state’s High Court for $1.3 million over the sale of goods, court records show. OW Bunker hasn’t hired lawyers to defend against the lawsuit, according to the records.
A person who picked up the phone at Singapore-based Hin Leong’s office said no one was immediately available to comment. A person who picked up the phone at OW Bunker Far East’s office said she couldn’t comment and declined to give her name.
A person who picked up the phone at OW Bunker’s office in Noerresundby said there wasn’t anyone available to comment.
Fuel Sales
Singapore is the world’s largest bunkering port, with ship-fuel sales totaling 42.68 million tons in 2013. The city-state’s port authority is working with industry associations to limit any potential impact on operations, it said in a statement today.
There isn’t a fuel shortage in the market and the port authority of Singapore may step in to help minimize any impact, according to KBC’s Lim. Bunker sales have been relatively weak this year and are down 0.1 percent through the first nine months of this year, compared to the same period in 2013, he said.
In March, investors drove OW Bunker’s shares up 21 percent in their first day of trading, following an initial public offering that valued the company at almost $1 billion. Sales from OW Bunker’s Singapore operations accounted for $4.8 billion of its revenue in 2013, up from $2.5 billion a year earlier, company records show.