2022 is expected to be ‘a year of accelerating consolidation’ for the bunker industry with liquidity becoming a more pressing issue, said Trafigura in its 2021 annual report published today (8 December) which includes a review of the progress of TFG Marine, its marine fuels joint venture with Frontline and Golden Ocean.
Branding 2021 as ‘one of the toughest on record for bunkering, as result of oversupply,’ Trafigura said TFG Marine, which was set up in 2019, had made ‘strong progress’, increasing its presence and volumes ‘to the point where it is already one of the top three physical bunker suppliers in the market.’
The strong financial backing of the Trafigura Group was credited with enabling TFG Marine ‘to provide favourable payment terms to customers when some other suppliers have struggled.’
More consolidation is predicted for the bunker sector moving into 2022 ‘with players exiting the market for various reasons, including insufficient access to financial liquidity.’
The annual report also noted that the bunker market is becoming ‘more transparent and more focused on managing the climate transition, with all the costs that this will entail.’
It added that for TFG Marine ‘this amounts to a unique opportunity to win business through innovation and the supply of alternative lower carbon fuels and cooperation with other players, supported by an already strong brand, a solid financial position and a reputation for transparency.’
The report also said that the growth of TFG Marine has given Trafigura’s fuel oil desk a much larger trading platform and access to customers, ‘especially in Asia where larger opportunities lie.’
According to Trafigura, a key challenge in the future will be understanding the supply and demand dynamics in a post COVID-19 world, where a number of large refineries will be coming on stream and bio-bunkers and alternative fuels enter the market.
Against this landscape, the commodity trader said it intends to grow its fuel and feedstocks business further ‘through close customer relationships and cooperation with TFG Marine and its other trading partners, with a target to build a leading position in alternative fuels and to provide sustainable long-term solutions to customers.’
In 2021 profit, turnover and volumes handled were the highest in Trafigura’s history. Revenues increased by 57% to $231,308 million, reflecting higher commodity prices and increased trading volumes.
Underlying EBITDA rose 13% to $6,867 million from $6,072 million in 2020. Net profit of $3,075 million was nearly double 2020’s result, despite including a one-off, non‑cash accounting adjustment relating to the consolidation of Puma Energy into the Trafigura Group, which reduced net profit by $716 million.
Trafigura traded an average of seven million barrels of oil and petroleum products per day over the year, a 25% increase over the year before.
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