OW Bunker collapse to shake up world's largest ship fuel market Singapore
(Reuters) - The collapse of OW Bunker in the wake of an alleged fraud at its Singapore trading unit will shake up the city state's more than $25 billion marine fuel market, the world's largest, as major companies expand and small ones shrink amid a credit squeeze.
OW Bunker, a leading supplier of marine fuel oil known as "bunker", filed for bankruptcy in Denmark a week ago after it revealed losses of at least $125 million at Dynamic Oil Trading, prompting banks to refuse to provide new credit lines.
In a market that relies heavily on open credit, traders fear the incident could create a domino effect, pulling more companies down with it.
"Credit is so tight, only the big boys will survive," said independent energy consultant Ong Eng Tong.
A slew of creditors have launched legal actions in Singapore to reclaim debts, while fears of counterparty exposure have pushed up credit costs and driven bunker fuel premiums to hit more than 2-year highs.
Fuel oil sellers are demanding payment guarantees for oil sold to bunker companies, while the cost to insure such deals is also set to climb as claims relating to OW Bunker roll in.
Shipowners are also heading to other ports in Asia, with Hong Kong sellers getting up to 20 percent more inquiries from shipowners following OW's collapse.
The Maritime and Port Authority of Singapore (MPA) and the Singapore Shipping Association have said there was no disruption to bunker supply in the city state.
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