Bunker Trading
Bunkers are marine fuels that are used aboard ships / vessels worldwide, making bunker trading hugely important. Bunker fuels are essential for our everyday life as we rely on the freight transportation of commodities and other goods such as fast-moving consumer goods (FMCG), consumer packaged goods (CPG), industrial products, parts of cars (break-bulk) etc. Also, people use ships for transport, fishing, leisure and entertainment etc.
The bunker market is extremely competitive, especially due to the struggling of the shipping industry which affects the dry freight and wet freight / tanker market. Further, the global economic slowdown and an oversupply of crude oil to the market have been additional key factors which fuel the competition within the bunker market.
Redstone Commodity Search has developed strong partnerships with bunker trading companies worldwide. We cover clients trading in marine fuel for physical and derivative bunker traders in ports across Europe, Asia, Africa, The Middle East, Australia, LATAM, and North America.
The Bunker Fuel Market
Our energy team covers the bunker markets extensively, actively sourcing, interviewing and screening candidate suitability on behalf of Trading Houses, Financial Institutions, Brokerages and Shipping Companies globally. (Find out more about our team here)
We have a strong network of candidates in the following fields:
- Physical back-to-back trading;
- Physical supply trading;
- Derivative trading;
- Risk management sales;
- Broking;
- Purchasing / sourcing;
- Physical sales;
- Logistics;
- Operations;
- Demurrage;
- Risk;
- Analysis (market and credit);
- Inspectors (quality / quantity specialists).
Recent hires our energy team has been responsible for included:
- Head of Bunker Trading, Singapore
- Head of Yacht Fuel Trading, London
- Bunker Broker, London
- Senior Bunker Trader, Greece
- Bunker Trader, Houston
- Head of Corporate Risk solution sales (focus on ship-owners), USA
Marine Fuel Oil Classifications
There are several different grades and types of marine fuels and they are traded in form of large cargo directly from the tanks (ex-wharfs) and on a smaller basis on the spot and OTC (over-the-counter) markets. Bunker fuel is distinguished between distillate fuels and residual fuels and within the maritime industry classifications include the following types and blends:
- Marine Gas Oil also known as MGO – Distillate fuel
- Heavy Fuel Oil also known as HFO – Residual fuel oil
- Marine Diesel Oil also known as MDO– Blended MGO and HFO
- Intermediate Fuel Oil also known as IFO – MGO and HFO with a lower Gasoil content than MDO
- Medium Fuel Oil also known as MFO – MGO and HFO with a lower gasoil content then IFO
Physical Bunker Trading
In general, physical bunker trading can be executed by back-to-back bunker traders as well as physical supply traders. Back-to-back trading traditionally involves purchasing the marine fuel oil from physical suppliers, refineries, and oil majors to further sell the cargo to end users (operators, ship owners) or other traders. In contrast, physical suppliers already have the storage and supply assets and are able to service both, the back-to-back traders and shipping companies directly.
Within the bunker trading industry, certain companies also focus on the yacht and super- / mega-yacht market, supplying marine fuel oil to yacht owners worldwide. Most prominent locations for yacht fuel trading include Cannes, Caribbean, Genoa, London, Miami, Monaco, Singapore, Sydney.
Hedging and Derivative Bunker Trading
Throughout the supply chain, companies hedge their risk exposure by utilising derivative instruments. Because of a lack of exchanged traded bunkers, the OTC bunker market arose to offer an additional trading platform for marine fuel oils. For example, shipping companies are looking to limit a potential future rise in costs throughout a voyage by using short hedge OTC contracts. Moreover, suppliers and producers can use long hedge forward bunker contracts in order to cover the long physical bunker positions they tend to hold. OTC bunker products include forwards, swaps, and options.
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