OREANDA-NEWS. The number of accredited bunker suppliers in Singapore could fall in 2017 on the back of strong fuel oil prices and the mandatory adoption of mass flow meters (MFM) for bunker barges on 1 January.

Singapore's roll-out of MFMs — which are designed to improve efficiency — comes with a cost. The Maritime and Port Authority of Singapore (MPA) estimates it will require about $158,000-216,000 to install a meter, as well as regular maintenance costs of about $14,000/yr.

Some suppliers are waiting to see how the new regulation affects the market, while a few have moved their barges to the outer port limits of Singapore. As of December, 93 of the 222 bunker barges operating in Singapore had still not been approved for the use of MFMs by the MPA, down by just six from the previous month.

Many market participants remain unsure how pricing for MFM services will develop next year. Prices for the MFM delivered service remain at a premium to the non-MFM delivered price, although this has narrowed significantly from $5-6/t early this year to $1-3/t in the fourth quarter. But many participants are able to match the two prices on most occasions.

Singapore approved the first MFM for use in June 2012. MFMs, also known as Coriolis flow meters, are able to measure bunker fuel by both weight and volume and so reduce opportunities for fuel to be siphoned off.

Uncertainty over how the metered system will affect supply and demand has prompted several market participants to move some of their bunker supply business outside Singapore port limits. This is providing opportunities for ports and storage terminals in neighbouring Malaysia to take business from Singapore. Local bunker suppliers at Tanjung Bin, Tanjung Pelepas, Port Klang and Port Kuala Linggi are offering bunker fuel on a non-MFM basis, potentially drawing some demand from Singapore next year.

But there is unlikely to be a wholesale switch away from Singapore, given infrastructure limitations, higher costs and lower market liquidity at the Malaysian ports. Monthly bunker demand at Tanjung Pelepas and Port Klang is around 150,000-200,000t and 100,000-150,000t respectively, a small fraction of Singapore's average monthly bunker sales of 4mn t.

There were 58 accredited bunker suppliers in Singapore as of September, down from 63 suppliers in 2014 and 59 in 2015. Bunker sales in Singapore reached 44.8mn t in January-November, up by 8.8pc compared with the same period last year.