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Argus Media: Singapore B24 bunker prices decline since 31 Jan on Ucome oversupply

B24 biofuel bunker prices in Singapore have weakened since 31 January, relative to VLSFO, due to huge supply of used-cooking oil methyl ester (Ucome), the blend’s main biofuel component.

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B24 biofuel bunker prices in Singapore have weakened since 31 January, relative to very-low sulphur fuel oil (VLSFO), because of abundant used-cooking oil methyl ester (Ucome) supply.

30 March 2023

Ucome is the blend's main biofuel component. The premium of B24 to delivered VLSFO bunkers in 

Singapore was assessed at $285.84/t on 31 January — the day Argus launched price assessments — and softened to an average of $260.79/t in February, according to Argus data. The premium has weakened further to an average of $229.76/t over 1-29 March.

This is largely because of plentiful Ucome supplies from China, the main import source for Singapore's B24 blend. China has been unable to export more to Europe, as the latter has been oversupplied for a while, said market sources.

Over-blending in the European road transport sector in the second half of last year had already squashed demand for Chinese Ucome. Traders were then taken aback when Chinese customs data showed year-on-year biodiesel exports more than double in the first two months of 2023 to 455,000t, with an all-time monthly high of 263,000t in January.

Almost all of these volumes were flowing to Europe and look set to add to already ample supplies of product that are double-counted towards European renewable transport fuel mandates — of which Ucome is one. This has sent Chinese prices plummeting by $355/t since 20 January to $1,030/t fob by 23 March, the lowest level since December 2020.

But there may be signs the market has bottomed out as prices recovered to $1,125/t fob China on 29 March. Firstly, Ucome demand traditionally picks up towards summer, with its higher cold filter plugging point properties making it more ideal for warmer weather use on the road. In addition, European prices are hovering around more than two-year lows, closing the arbitrage from Asia and leading several producers on both sides to temporarily slow production or shut, rather than operate at a loss, which should go some way towards rebalancing the market over the next few weeks and months.

Prices for B24 blends based on palm oil methyl ester (PME) have also emerged in the market, with discounts to Ucome blends at around $60-80/t.

Abundant palm supplies and numerous biodiesel production facilities in Indonesia and Malaysia make grades produced from the vegetable oil much cheaper than Ucome. Demand for PME is also not nearly as high outside of its two main production centers, and does not have the double-counting incentive that Ucome has in Europe. The EU in fact plans to phase out palm completely from its renewable fuels pool by 2030.

But Ucome remains the dominant bio-component in bunker blends in Singapore, despite there currently being no regulatory restrictions on what can be mixed into a B24 blend. This is because many major stakeholders share the EU's reservations over palm-based grades on perceived sustainability issues and concerns over deforestation, despite palm oil's cost advantages.

Ucome is blended with high-sulphur fuel oil (HSFO) as well as low-sulphur marine gasoil (LSMGO), but those blends are a very small part of the market, say market participants.

The weaker Ucome prices have resulted in B24 prices being assessed almost at parity with LSMGO bunkers on some days, which could further stimulate demand in the city-state. The premium of B24 to LSMGO so far in March has averaged $54.78/t.

In a speech given earlier this year, Singapore's minister of transport S Iswaran said that Singapore in 2022 sold 140,000t of biofuel bunkers, compared to just 16,000t of LNG bunkers.

Biofuels are a popular way for shipping companies to reduce greenhouse gas emissions and meet the International Maritime Organization's decarbonisation goals, as they are a "plug and play solution" that can be quickly deployed.

By Sammy Six and Amandeep Parmar

 

Photo credit and source: Argus Media
Published: 31 March, 2023

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Biofuel

China Shipping & Sinopec Suppliers completes first biofuel bunkering op of passenger ship in Dalian

Firm successfully refuelled passenger ship “Chang Shan Dao” owned by Cosco Shipping Ferry with B24 bio bunker fuel on 29 November at Dalian Cruise Port.

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China Shipping & Sinopec Suppliers completes first biofuel bunkering op of passenger ship in Dalian

China Shipping & Sinopec Suppliers Co., Ltd. on Wednesday (29 November) successfully refuelled passenger ship "Chang Shan Dao" owned by Cosco Shipping Ferry Co., Ltd. with B24 bio bunker fuel at the Dalian Cruise Port. 

The occasion marked the first biofuel bunkering operation for passenger ships in China. 

The B24 biofuel oil used was blended with 24% biofuel and 76% conventional low-sulphur fuel oil.

Sinopec China Shipping Fuel Supply, which is responsible for the bunkering operation, is a bunker supply firm jointly established by Sinopec Group and COSCO Shipping Group.

According to Li Zhi, Deputy Party Secretary and Deputy General Manager of China Shipping & Sinopec Suppliers Co., Ltd., the biofuel bunkering business is another step in the company's active business of the group's development strategy. 

The bunkering operation after the firm completed the first bonded biofuel bunkering operation of a domestic ship on 7 September. 

Disclaimer: The above article published by Manifold Times was sourced from China’s domestic market through a local correspondent. While considerable efforts have been taken to verify its accuracy through a professional translator and processed from sources believed to be reliable, no warranty is made regarding the accuracy, completeness and reliability of any information.

Photo credit: China Shipping & Sinopec Suppliers
Published: 8 December, 2023

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Alternative Fuels

Singapore, Tianjin to pilot and trial alternative bunker fuels following shipping corridor MoU

Singapore – Tianjin Green and Digital Shipping Corridor will serve as a valuable testbed for both countries to pilot and trial digital solutions, alternative fuels and technologies, amongst others.

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Singapore, Tianjin to pilot and trial alternative bunker fuels following shipping corridor MoU

The Maritime and Port Authority of Singapore (MPA) and the People’s Republic of China’s Tianjin Municipal Transportation Commission on Wednesday (6 December) signed a memorandum of understanding (MoU) to establish the Singapore – Tianjin Green and Digital Shipping Corridor.

Mr Teo Eng Dih, Chief Executive, MPA, and Mr Wang Zhinan, Director General, Tianjin Municipal Transportation Commission, signed this MoU.

The MoU marked the first Green and Digital Shipping Corridor established between Singapore and China to support the decarbonisation, digitalisation and growth of the maritime industry between Singapore and the Bohai Region. 

The Singapore – Tianjin Green and Digital Shipping Corridor will serve as a valuable testbed for both countries to pilot and trial digital solutions, alternative bunker fuels and technologies, and facilitate talent development to support the decarbonisation and digitalisation of shipping. 

Singapore and Tianjin will work with the research community, the  institutes of higher learning, and industry stakeholders such as shipping lines, port operators, shipbuilders, classification societies, and bunker suppliers to enable more efficient port clearance through digital exchanges, encourage the offtake of zero or near-zero greenhouse gas emission fuels and adoption of new fuel technologies, spur innovation and support the growth of the maritime startups community, and facilitate manpower training and professional development.

The establishment of the Singapore – Tianjin Green and Digital Shipping Corridor reaffirms the strong commitment by Singapore and Tianjin to accelerate maritime decarbonisation and digitalisation. Singapore will also be exploring the establishment of similar collaboration with other maritime and port ecosystems within China.

Photo credit: Maritime and Port Authority of Singapore
Published: 8 December, 2023

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Decarbonisation

Report highlights routes-based action plan methodology to accelerate uptake of clean bunker fuels

NextGEN Connect-GreenVoyage2050 collaboration, which includes Singapore, emphasises the important role of regional energy hubs in enabling the inclusive adoption of clean marine fuels.

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Report highlights routes-based action plan methodology to accelerate uptake of clean bunker fuels

The Maritime and Port Authority of Singapore (MPA) on Thursday (7 December) said the NextGEN Connect-Green Voyage2050 Project identified a key role for regional hubs to help connect large demand clusters and remote locations, with regional fuel supply sources, in order to enable a more inclusive and effective transition to a low-carbon maritime future. 

The project is a collaboration between Singapore, Norway and the International Maritime Organization (IMO). 

These findings were unveiled in the Lloyd’s Register Maritime Decarbonisation Hub (LR MDH) report titled Routes-based Action Plans: A Toolkit launched at the Voyage to Net-Zero Forum, which was organised by MPA, at the 28th United Nations Climate Change Conference (COP28/CMP8/CMA5) yesterday.  

The report was developed following a workshop discussion that was held from 5 to 6 October 2023 in Singapore, with the participation of 40 stakeholders representing ports and National Administrations across Asia, based on the concept of the LR MDH’s First Movers Framework for green corridors. The workshop simulated the process steps of the routes-based action plan methodology, addressing the limitations in its application in the wider Asian context. Additional engagements with stakeholders from the Pacific are envisaged to further refine the methodology. 

“One of the key findings in our report highlighted the varying pace of decarbonisation efforts across the Asian region and the need for regional coordination among governments to establish energy clusters that will serve both as demand centres and energy producing hubs” said Charles Haskell, Director at LR MDH. 

The creation of energy producing hubs includes defining a strategy that brings together demand from different countries at different developmental stages across the region to build up investment cases for implementing energy infrastructure at scale, all the while taking into consideration the economic and social benefits for local communities. 

The report also emphasised that routes-based action plans should be steered by national governments to give confidence to the industry’s infrastructure investment decisions, with development banks and regional funds needing to play a part to help tailor financing solutions to support infrastructure development. 

“If we truly want to achieve a net-zero future where no one is left behind, we cannot focus only on existing first mover initiatives. We must also study locations where the energy infrastructure is still in its infancy”, added Charles Haskell. 

Essential to driving the implementation of routes-based action plans, as highlighted in the report, is the pooling of resources and capacity building to develop the business case for building the necessary infrastructure for regional hubs that include Least Developed Countries (LDCs) and Small Island Developing States (SIDS). This will require regional coordination and collaboration involving governments and all stakeholders across the maritime supply chain.

Mr. Teo Eng Dih, Chief Executive of MPA, said: “As we steer toward a sustainable maritime future, fostering a collective and inclusive approach is imperative in the development of green corridors and the energy transition to decarbonise international shipping.”

“The NextGEN Connect-GreenVoyage2050 collaboration emphasises the important role of regional energy hubs in enabling the inclusive adoption of clean marine fuels, particularly for LDCs and SIDSs. MPA looks forward to continuing its collaboration with IMO, Ministry of Climate and Environment of Norway and LR MDH to pilot solutions to reduce GHG emissions from ships and drive innovative transformations in the maritime industry.”

Sveinung Oftedal, Chief Negotiator of the Norwegian Ministry of Climate and Environment, said: “Separate routes for emission-free ferries and ships can play an essential role in stimulating early action to adopt zero or near-zero emission technologies and fuels, and hence are an important step towards decarbonising shipping. There is currently a significant volume of maritime traffic between Asian countries, and our workshop was a great forum to discuss opportunities the decarbonisation of maritime shipping can bring and how efforts can be linked to countries’ wider energy transition.”

Jose Matheickal, IMO Director of Partnerships and Projects, said: “Supporting developing countries, including SIDS and LDCs, in their efforts to implement the 2023 IMO Strategy on the Reduction of GHG Emissions from Ships is imperative to the decarbonisation of the maritime sector. IMO is pleased to provide, through this collaboration, practical support around the development and subsequent implementation of National Action Plans and route-based actions in line with IMO’s MEPC RESOLUTION.366(79) that encourages Member States to undertake these voluntary actions to facilitate the achievement of greener shipping and reduced emissions.” 

Note: ‘Routes-based action Plans: a toolkit’ can be found here

Photo credit: Maritime and Port Authority of Singapore
Published: 8 December, 2023

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