Once a week, bunker intelligence platform ENGINE will publish a snapshot of alternative and conventional bunker fuel prices in the world’s two biggest bunkering hubs. The following is the latest snapshot:

5 August 2024

• Conventional bunker prices nosedive on Brent’s collapse
• Bio-blends tumble with fossil components
• LNG soars while other bunker fuels plummet

Conventional bunker fuel prices have nosedived in the past week following a massive selloff in the front-month ICE Brent futures contract. Brent futures dropped by a significant $4.32/bbl ($32/mt) over the past week, reaching their lowest level in eight months.

This marks the most aggressive selloff in Brent since May, according to Warren Patterson, head of commodity strategy at ING. Fears of a recession in the US, combined with weaker oil demand from China, have offset concerns that oil supply could be severely affected if the conflict in the Middle East escalates further, Patterson noted.

LNG is no longer the cheapest alternative for dual-fuel ships in Rotterdam and Singapore. The VLSFO-equivalent LNG bunker price in Rotterdam has flipped from a $34/mt discount to a $44/mt premium over its VLSFO. When adding in estimated EU Allowances (EUA) costs – which favour LNG over VLSFO – Rotterdam’s LNG is $32-38/mt costlier than its VLSFO.

Singapore’s LNG premium over VLSFO has widened by $23/mt, to $39/mt with estimated EUA costs added, and $45/mt without.

The price gap between Rotterdam’s HBE-qualified B24-VLSFO blend and LNG has narrowed by a sharp $79/mt in the past week, to $123/mt.

Singapore’s UCOME-based B24-VLSFO blend is $86/mt more expensive than its LNG, reflecting a $24/mt drop from a week ago.

VLSFO

Rotterdam’s VLSFO price has dropped by $16/mt in the past week, or by $12-14/mt when we add the estimated EUA costs.

Singapore’s VLSFO price has slipped $8-10/mt lower in the past week with estimated EUA cost added.

VLSFO availability remains tight in both Rotterdam and Singapore. Although Brent’s sharp decline over the past week has driven prices lower, tight VLSFO availability in both Rotterdam and Singapore seems to have prevented more significant reductions.

VLSFO is in low demand in Rotterdam, a source said. This could have added some downward pressure on the price.

In Singapore, VLSFO availability has tightened as several suppliers are running low on stock or have limited barge availability. Most suppliers now recommend lead times of 12-22 days, up from 12-18 days the week prior.

Biofuels

Rotterdam’s B24-VLSFO HBE price has decreased by $13-16/mt, and its B24-LSMGO HBE price has dropped by a more significant $20-23/mt in the past week – both including estimated EUA costs.

The two benchmarks have declined amid a drop in the values of pure LSMGO ($23/mt) and pure VLSFO ($16/mt) and the price of palm oil mill effluent methyl ester (POMEME) feedstock ($20/mt).

Rotterdam sold about 234,000 mt of bio-blended bunkers in the second quarter, down by 11% from the previous quarter. Nearly 70% of the bio-bunkers sold in the second quarter was VLSFO-blended.

Singapore’s B24-VLSFO UCOME price has shed $9-10/mt in the past week, while its B24-LSMGO UCOME price has declined by a greater $17-19/mt. A $10/mt drop in the UCOME FOB China benchmark has added downward pressure on both the benchmarks.

Pricing activity for Chinese UCOME FOB in bulk was mostly muted last week because of impending EU tariffs on Chinese biodiesel imports, according to PRIMA Markets.

LNG

Rotterdam’s LNG bunker price has shot up by $62/mt in the past week. If we add the estimated EUA costs, the price has increased by another $2-4/mt over the outright price.

The price has spiked on the back of a strenghtening underlying Dutch TTF contract, which rolled from August to a higher-priced September contract. Rising LNG demand due to heatwaves across southern Europe have also added upward pressure on the price.

Concerns over supply constraints due to an outage at Norwegian operator Equinor’s Visund gas field and a maintenance shutdown at Norway’s Kaarsto gas-processing facility have also contributed to the price increase.

Singapore’s LNG benchmark has jumped $13-15/mt higher in the past week.  

The Ichthys LNG train 2 in Australia, operated by Japanese oil firm Inpex, is running at approximately 80% of its processing capacity following a 19 July outage. It is expected to remain at reduced capacity through August, according to Rystad Energy. It is a major LNG supplier to Asia-Pacific with a processing capacity of 4.45 million mt/year.

In addition, China, Japan and South Korea are forecast to experience above-average temperatures until 13 August, which will likely keep gas demand high, Rystad added.

By Konica Bhatt

Photo credit and source: ENGINE
Published: 6 August, 2024