Jeff has nearly 40 years of bunker buying experience in marine fuels, working as both a bunker broker and bunker trader. He first joined the relatively new bunker buying section ay Davies and Newman Shipping Company in 1973, after which he joined the fledgling company Bunkerfuels UK in 1984.
In 2001, Bunkerfuels Group was incorporated into the leading global bunker company World Fuel Services, whose other main company at that time was Trans-Tec Services. Both companies amalgamated some time later. Jeff remained here until his retirement in 2012, latterly working exclusively as an in-house bunker buyer for the diverse portfolio of various world-wide bunkering companies World Fuel Services owns.
After a career in the bunker industry spanning 40 years with well-known UK-based companies, I have been retired for over two years now.
But I do, from time to time, glance at what’s happening in the bunker world, and one thing that always intrigues me is the price guidance given by bunker pundits advising buyers to "clear their desks of all enquiries" because the market is rising.
"Market going up.. PANIC ... buy buy buy...stem stem stem".
But why? This is reverse logic, as inevitably by the next day or so the market will collapse again.
Anybody can "call" a market and by the law of averages they should expect a 50% strike rate. Good luck would get them 60% and bad luck would get them 40%.
Most suppliers are not stupid and are going to take advantage, price-wise, on a rising market, especially if there are many enquires all put out in the market at the same time. This in itself increases the demand and hence prices. And suppliers can always pick and choose which ones to quote on.
In my experience, a market rarely continues going up more than two days in a row. It may be three to four days at the most in very exceptional circumstances. So if the market is going up, then buyers should wait for the dips, especially in this type of market which has been typically flat for some time now.
Usually on a "falling market" a buyer could get a much better price by waiting. Reading the markets, using their gut feeling and advising clients of such, should be the main critical knowledge used by all brokers /traders. But so often it's just "market going up so stem stem stem".
Most of the savvy bunker buyers should give their bunker enquiry out to a broker or trader to "advise when best to stem", not on a day so close to delivery that there is no choice but to stem or lose a delivery because it's so prompt.
Unless a prompt fixture of a ship is required, then most buyers "should" know the various ports weeks beforehand. Some buyers however, for some strange reason or another, will only give the enquiry out a few days before an ETA – resulting in having to stem straight away. This might result in getting the best price on the day, but not the best price for the ship.
A big difference.
So brokers/traders telling clients to buy on an increasing market is ludicrous, unless a caveat is advised depending on when the ship is due.
It's not buying on a "rising" market - but buying on the "dips" that gets the best deals.
And don't wait for the bottom of the market. This never comes. "Create" the bottom of the market!
These days there is too much information being posted online; much of it is conflicting on price, market direction, geopolitical news, whatever.. that many players get bewildered and confused and revert back to the "herd" mentality of blindly following the leader and stem when markets start to rise... instead of using their own professional market knowledge and gut feelings. Nice to hear you are still "dipping" into the bunker market after all these years....