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Asia: the global growth engine

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Asia continues to play a fundamental role in shaping global trade and energy markets, with the region experiencing significant economic and demographic growth in recent years.
South East Asia in particular is driving this growth story with flourishing GDP on the back of strong population growth coupled with growing transportation and industry demand for oil.
New regulations as well as emerging refining capacity in the region presents a wealth of opportunities for the tank storage sector.
The challenges and opportunities in Asia were debated in greater detail at the Tank Storage Asia conference in the Marina Bay Sands, Singapore.
Starting proceedings, Tankbank CEO Tony Quinn discussed some key developments impacting the industry and said that the market is at the bottom peak of the cycle but it will come back again.
He said: ‘The Asia Pacific region will always be the growth location – there is so much transition with people getting wealthier, more people are driving, and we have a lot of refining capacity coming online.’
His perspective on IMO is that there is a high level of uncertainty in the market but that it seems that the fuel of choice going forward will be gasoil. ‘We are not looking at any stability in the shipping business until 2025.’
Discussing the concept of ‘overtanking’ Quinn said: ‘There is a danger in the industry of overtanking a supply point and a demand point and it could bring down the price of storage. In Fujairah for example there was a lot of speculative tank building.’
He also identified the next growth markets in the region, which include Vietnam, India, Bangladesh, Pakistan and the Philippines.
Moving on to the dynamics of spot storage, Luc Bonami, managing director of Anno Chemicals, said that when it comes to the chemical business, there is need for spot storage in Asia and that the ideal spread is 75% of capacity on contract and 25% for spot. ‘It is a large market for growth,’ he said.
Echoing the views of the other speakers, PJK International MD Patrick Kulsen told delegates that South East Asia is growing at a high rate and that the region is growing rapidly.
Gasoline has gone into surplus and diesel is increasingly oversupplied while there is a structural shortage in fuel oil.
He identified the three themes affecting the oil markets as the low oil price and the new oil price regime, the shape of the forward curve and IMO.
‘Increasing crude price suggests that backwardation will be around for a while and contango will not develop for this year or next.’ Looking at the supply outlook for the region, Kulsen said that while refining capacity will increase in China and India, other smaller countries are also investing. He added that
gasoline will increase and there will be a lot of supply.
Examining the IMO 2020 regulation in greater detail, Wood Mackenzie’s Konrad Jar said that this is the first big step change in the marine fuel market for years.
‘We expect a significant shift away from high sulphur fuel oil towards distillates and very low sulphur fuel oil in 2020.’ He added that there have been just under 1,000 vessels installed with scrubbers and that it makes up a very small part of the market.
He says that Wood Mackenzie expects full compliance with the regulation by 2025. Looking at the effects it will have on Singapore, Jar concluded: ‘Singapore’s position in the bunker market is driven by its strategic location along trade routes and transhipment volumes, driven by surplus and deficit volumes. However, established hubs like Singapore may lose market share to locations with surplus position in distillate and higher availability of VLSFO.’
Mike Beviss, senior commercial advisor for Benalec, said that while an additional four million m3 of storage capacity is planned for Singapore, there is still a lot of room for growth.
Other presentations throughout the two-day conference included the use of drones in a terminal, fire safety management, insight
into Vopak’s safety, health and environment initiatives as well as sessions on various aspects of Singapore’s new Safety Case regime, culminating in a panel debate on it.
Tank Storage Asia returns to the Marina Bay Sands on September 25 and 26th 2019. For more information, visit