Analysis
DNV: Methanol-fuelled order trend continues, with first ammonia DF newbuilding contracts recorded in Oct
‘Finally, we have order confirmation on the first ocean going vessels with ammonia propulsion,’ exclaimed Martin Wold, Principal Consultant in DNV’s Maritime Advisory business.

Published
1 month agoon
By
Admin
Latest figures from DNV’s Alternative Fuels Insight (AFI) platform in October saw six LNG-powered vessels added to the database. Additionally, the trend of increased orders for methanol-powered vessels continues, with 14 methanol-fuelled vessels ordered.


October also saw the first confirmed order for two ocean-going vessels equipped with ammonia dual fuel systems.
Following in the footsteps of the first orders that were made for LNG, methanol, and LPG powered vessels, the initial orders for ammonia-fuelled vessels are for ships designed to also transport the same fuel as cargo.
“Finally, we have order confirmation on the first ocean going vessels with ammonia propulsion. This simplifies the chicken and egg dilemma related to fuel availability versus demand,” exclaimed Martin Wold, Principal Consultant in DNV's Maritime Advisory business.
“It also addresses crew training, as crew will already be trained specifically on gas and ammonia carriers, so this does not become an extra burden or risk to manage.
“Furthermore, we see that the drivers for alternative fuels in general, and the push for ammonia as a fuel in particular, compared to what was the case in the early days for LNG and methanol respectively, are much stronger at this stage of the industry development.
“So, we will see orders for other ship types even before we get operational experience from gas carriers using ammonia as a fuel.”


Photo credit: DNV
Published: 6 November 2023
Bunker Fuel
Integr8 Fuels: Off spec issue with MGO equally likely to occur as with HSFO
In its Bunker Quality Trends Report Q3 2023, Integr8 highlighted that the industry is equally likely to face an off specification issue with MGO as with HSFO, with VLSFO being one third less likely.

Published
3 weeks agoon
November 15, 2023By
Admin
Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Tuesday (7 November) released its Bunker Quality Trends Report Q3 2023, analysing data from 120 million metric tons of supply, to reveal key trends relating to fuel quality and availability. An excerpt of the report is as follows:
Introduction: Challenges fueling change
As we come to the end of another year in the world of bunkers that seems to have passed with the blink of an eye, our minds shift towards the challenges on the horizon and how as an industry we need to embrace change to profit and succeed in the future.
This is the third Integr8 Fuels quality report covering the last six months of supplies globally where we again dissect and compare the likelihood of hidden losses and off specification issues across all commercial grades of bunkers and key ports.
Using ‘best in class’ available data from over 120 million metric tons (MT) of deliveries globally across 1,300 locations and from over 800 suppliers, we will also assess fuel quality trends using our own Integr8 Quality Index which scores the proximity (or otherwise) of individual parameters within each sample to the relevant table 1 or table 2 specification limits within ISO 8217.
Finally, given the context of the incoming changes we will consider some of the challenges that decarbonisation and verification of emissions will bring to the industry.

Part 1: Off specification frequencies
How likely are we to be faced with an off specification situation?
In the last 180 days, owners’ analysis available to Integr8 Fuels has highlighted that you are equally likely to have an off specification issue with marine gas oil (MGO) as with high sulphur fuel oil (HSFO) with very low sulphur fuel oil (VLSFO) being one third less likely (see figure 1).

What is the likelihood of receiving noncompliant or critically off spec bunkers?
It is always important to consider the context of the off specification incidents.
To do this it is essential to consider the likelihood of MARPOL Annex VI (sulphur) or SOLAS (flash point) infractions and the likelihood of critical off specification incidents such as cat fines, total sediment potential, used lubricating oils, sodium and ash content (high risk) against routine and easily rectifiable off specification issues classified “low risk” such as a high viscosity in HSFO.
The rule of thumb when comparing off specification incidents by grade is that the parameters targeted in any blending model are the most likely to be outside the specification.
For example, VLSFOs are targeted on sulphur, with the price difference for 50,000MT of fuel with a sulphur content of 0.49 compared to 0.45 possibly equating to hundreds of thousands of dollars. It’s hardly surprising, therefore, that both VLSFO and MGO, both of which are blended to a sulphur target, have more prevalence of MARPOL Annex VI non-compliances at 0.5% and 0.1% respectively.
However, MARPOL Annex VI is not the only compliance issue - we cannot ignore the requirement for flash point being 60°C or above as demanded by SOLAS. Indeed, off specification flash point, particularly with LSMGO, may be an unintended consequence of pulling low sulphur automotive or inland grades into the bunker pool as identified later in this paper.
High risk off specification incidents, defined as the total of both compliance and high risk off specifications, are seen to be most prevalent in MGO followed by VLSFO and, finally, HSFO. In fact, if you strip out compliance off specification, incidents relating to total sediment potential (TSP), aluminium and silicon (Al+Si) etc. for residual grades are very low indeed.
That said, there are many nuances, from region to region, to port-to-port, and even supplier-to-supplier at the same location. It therefore remains essential to consider these when buying bunkers and we will address some of the challenges later in the paper.
Availability of products (September 2023)
Unsurprisingly, marine gas oil is the most available product (640 ports) given the ability to substitute and supply higher quality inland or automotive grades and logistical ease of supplying what are quite often small quantities.
VLSFO is also seen to be readily available across all continents but at 28% fewer ports (458
ports), this because of larger quantities being ordered and the storage and barge infrastructure to support these supplies in general.
High sulphur fuel oil is the only product which is not readily available, with only 231 ports listed as of September 2023 (see figure 2). HSFO availability is centered around bunkering hubs and geographically key areas likely to receive passing trade from VLCCs and / or other scrubber fitted sectors. It is important, therefore, to plan carefully for HSFO and consider the type of scrubber fitted to the vessel along with any local limitations in forthcoming voyages that may require a fuel switch to LSMGO, for example.

Biofuel blends
Data is now becoming available for tests of identified biofuels supplied globally and whilst this is still very small in comparison with conventional fuels, it is clear to see the apparent void stretching from Singapore to Europe currently present.
Moreover, we are not currently able to comment on the sustainability of the biofuels being supplied but can confidently predict that Indonesia fuels, for example, will likely be sourced from palm oil and would not satisfy a verifier of emissions. ARA, and in particular Rotterdam, is seen to be the epicenter of supply in Europe given the current subsidies available in the Netherlands. VLSFO blends are almost exclusively limited to bunker hubs.

Which specifications are being traded?
Even as we eagerly anticipate the new version of ISO 8217 hopefully expected in early 2024, we continue to work in the past when it comes to the specifications we buy and sell on a day-to-day basis.
The scale of the challenge can be laid bare by considering the charts below, (figures 4 and 5), which identify the split of residual and distillate ISO 8217 grades traded by product group in the last 180 days.
Residual Fuels
Just over one quarter of trades are guaranteed to the latest version of the specification (2017) which is virtually unchanged compared to previous figures.
Distillate Fuels
In the case of MGO, only 18% of fuels traded were sold as 2017 fuels in the last 180 days, slightly less than previous. A very slight reduction in 2005 fuels was noted from 11% to 9%, however it is worth remembering that this specification is nearly 19 years old.

Note: The full report of Integr8 Fuels’ Bunker Quality Trends Report Q3 2023 can be found here.
Photo credit: Integr8 Fuels
Published: 15 November 2023
Bunker Fuel
JLC China Bunker Market Monthly Report (October 2023)
Country tallied roughly 1.63 million mt of bonded bunker fuel sales in the month, with the daily sales down by 5.74% from September to 52,419 mt, JLC’s data shows.

Published
4 weeks agoon
November 10, 2023By
Admin
Beijing-based commodity market information provider JLC Network Technology Co. recently shared its JLC China Bunker monthly report for October 2023 with Manifold Times through an exclusive arrangement:
Bunker Fuel Demand
China’s bonded bunker fuel sales decrease in October
China’s bonded bunker fuel sales decreased further in October, because of tighter supply.
The country tallied roughly 1.63 million mt of bonded bunker fuel sales in the month, with the daily sales down by 5.74% from September to 52,419 mt, JLC’s data shows.
The sales by Chimbusco, Sinopec Zhoushan and SinoBunker slid to 520,000 mt, 580,000 mt and 70,000 mt in the month respectively, while those by China ChangJiang Bunker (Sinopec) stabilized at 35,000 mt. At the same time, enterprises with regional bunkering licenses sold about 420,000 mt of bonded bunker fuel, up from 388,300 mt in September.
China’s bonded bunker fuel sales continued to drop, as low-sulfur fuel oil supply tightened and prices stayed relatively high. Meanwhile, the barging capacity at certain ports was affected by bad weather, which also depressed the sales.
China’s bonded bunker fuel exports inch down in Jan-Sept
China’s bonded bunker fuel exports edged down in the first nine months of this year, mainly because of a decline in domestic low-sulfur fuel oil (LSFO) output.
The country exported about a total of 15.24 million mt of bonded bunker fuel in January-September, a dip of 0.66% from the same months in 2022, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).
Among the exports were 14.44 million mt of heavy bunker fuel and 802,600 mt of light bunker fuel, which accounted for 94.73% and 5.27% of the total, respectively.
Regarding the exports by supplier, enterprises with national bunkering licenses exported about 12.15 million mt of bonded bunker fuel in the nine months, accounting for 79.69%, while those with regional bunkering licenses supplied about 3.10 million mt, accounting for 20.31%.
Chinese refiners reduced their bonded bunker fuel exports in the first three quarters of this year, as domestic supply decreased amid falling LSFO production. Refineries lowered their LSFO output in the period when their production enthusiasm was greatly depressed by less considerable margins. The country produced about 11.10 million mt of LSFO in January-September, a cut of 5.45% year on year, JLC’s data shows.
In September alone, China’s bonded bunker fuel exports settled at 1.58 million mt, down by 2.79% from the previous month and 21.13% from a year earlier. Heavy bunker fuel exports amounted to 1.47 million mt, accounting for 92.73% of the total, while light bunker fuel exports stood at 115,200 mt, occupying 7.27%.
Suppliers with national bunkering licenses tallied approximately 1.18 million mt in the month, accounting for 74.23% of the country’s total, with Sinopec Fuel Oil and Chimbusco taking 64.35%. At the same time, enterprises with regional licenses exported about 408,300 mt, accounting for 25.77%.


Domestic-trade bunker fuel demand extends gains in October
Domestic-trade bunker fuel demand extended gains in October, because of post-holiday restocking.
Domestic-trade heavy bunker fuel demand settled at 400,000 mt in the month, rising by 40,000 mt or 12.12% month on month, JLC’s data shows. Some shipowners increased purchases after the holiday for the National Day, as they had run out of stockpiles. Meanwhile, high-sulfur fuel oil prices fell to a relatively low level, which also attracted buyers to make deals.
Domestic-trade light bunker fuel demand surged to 165,000 mt in October, growing by 25,000 mt or 19.23% from a month earlier, the data indicates. Downstream buyers showed higher buying interest when MGO prices rolled back. At the same time, shipping demand at inland ports increased, with coal transportation speeding up amid the heating season in North China.
Bunker Fuel Supply
China boosts its September bonded bunker fuel imports
China boosted its bonded bunker fuel imports month on month in September, as domestic low-sulfur fuel oil (LSFO) output decreased rapidly.
The country tallied about 389,800 mt of bonded bunker fuel imports in the month, surging by 27.18% month on month, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).
Domestic refineries slowed down their LSFO production amid bad margins, leading refiners to import more bonded low-sulfur bunker fuel to meet demand. The country produced about 1.17 million mt of LSFO in the month, with the daily output dropping by 5.40% month on month to 39,000 mt, JLC’s data indicates. Meanwhile, some distributors expanded their bonded low-sulfur bunker fuel imports as more unit maintenance and export quota tightness triggered fears of a further decline in LSFO output in the fourth quarter.
Imports of high-sulfur bunker fuel and marine gas oil (MGO) largely stabilized at a normal level.
Russia surpassed Malaysia and became the largest supplier by shipping 214,000 mt of bonded bunker fuel to China, accounting for 54.9% of China’s total imports. Malaysia slipped to the second place with 61,800 mt, accounting for 15.9%, while Singapore ranked third with 60,900 mt, occupying 15.6%. Shipments from South Korea were reduced to only 53,100 mt, accounting for 13.6% and bringing the country to the fourth place.
On a year-on-year comparison, however, China’s bonded bunker fuel imports fell by 8.90%.
China’s bonded bunker fuel imports totaled 2.88 million mt in the first nine months of this year, plunging by 19.18% from the corresponding months in 2022, decelerating from a 20.58% slump in January-August.

Domestic-trade bunker fuel supply continues to grow in October
Domestic-trade bunker fuel supply continued to grow in October, as blenders boosted production when their blending margins for bunker fuel were widened by a drop in blendstock prices.
Chinese blenders supplied about 450,000 mt of domestic-trade heavy bunker fuel in the month, a boost of 60,000 mt or 16.22% month on month, JLC’s data indicates.
Similarly, refineries ramped up their light bunker fuel production amid relatively fair margins. Domestic-trade marine gas oil (MGO) supply rose to 180,000 mt in October, an uplift of 20,000 mt or 11.76% from September.

Bunker Prices, Profits



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JLC Network Technology Co., Ltd is recognized as the leading information provider in China. We specialized in providing the transparent, high-value, authoritative market intelligence and professional analysis in commodity market. Our expertise covers oil, gas, coal, chemical, plastic, rubber, fertilizer and metal industry, etc.
JLC China Bunker Fuel Market Monthly Report is published by JLC Network Technology Co., Ltd every month on China bunker market, demand, supply, margin, freight index, forecast and so on. The report provides full-scale & concise insight into China bunker oil market.
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Related: JLC China Bunker Fuel Market Monthly Report (September 2023)
Related: JLC China Bunker Market Monthly Report (August 2023)
Related: JLC China Bunker Market Monthly Report (July 2023)
Related: JLC China Bunker Market Monthly Report (June 2023)
Related: JLC China Bunker Fuel Market Monthly Report (May 2023)
Related: JLC China Bunker Market Monthly Report (March 2023)
Related: JLC China Bunker Market Monthly Report (February 2023)
Related: JLC China Bunker Market Monthly Report (January 2023)
Related: JLC China Bunker Market Monthly Report (December 2022)
Related: JLC China Bunker Market Monthly Report (November 2022)
Related: JLC China Bunker Market Monthly Report (October 2022)
Related: JLC China Bunker Market Monthly Report (September 2022)
Related: JLC China Bunker Market Monthly Report (August 2022)
Related: JLC China Bunker Market Monthly Report (July 2022)
Related: JLC China Bunker Market Monthly Report (June 2022)
Related: JLC China Bunker Market Monthly Report (May 2022)
Related: JLC China Bunker Market Monthly Report (April 2022)
Related: JLC China Bunker Market Monthly Report (March 2022)
Related: JLC China Bunker Market Monthly Report (February 2022)
Related: JLC China Bunker Market Monthly Report (January 2022)
Note: China-based commodity market information provider JLC Technology has been providing Singapore bunkering publication Manifold Times China bunker volume data since 2020. Data from that period is available here.
Photo credit: JLC Network Technology
Published: 10 November, 2023
HSFO
Integr8: Geopolitics have a huge bearing on our market, but something different is happening in HSFO bunker pricing
Firm discusses the impact of the extreme events unfolding in Middle East, weaker economic indications for China and Europe and causes of huge spread between VLSFO and HSFO, amongst others.

Published
1 month agoon
October 31, 2023By
Admin
By Steve Christy, Research Contributor, Integr8 Fuels
[email protected]
26 October 2023
We are in a global, geopolitical market
It is often said that the more dramatic movements in oil prices are usually driven by world events, and that the bunker market is no different to any other part of the crude and products markets.
This is exactly what has happened in October. Crude prices were falling in the first week of the month on the back of weaker economic indications for China and Europe. Even though Saudi Arabia and Russia stated they would maintain their voluntary production cutbacks through to the end of the year, this had little impact on the market and oil prices continued their bearish slide.
Over this first week of October Brent futures were down $7/bbl, Singapore VLSFO down $50/mt and Rotterdam VLSFO down by almost $40/mt.
Shortly thereafter, the extreme events in the Middle East took hold. Oil prices rebounded with the news, wiping out the declines seen in the previous week; Brent futures moved back up to the low $90s, Singapore VLSFO returned to around $680/mt, and Rotterdam VLSFO hit $625/mt.
These “down and up” price developments and the close relationship between Brent crude and VLSFO are shown clearly in the chart below.

Prices have eased at the time of writing, as people wait to see where the Middle East conflict goes and weaker economic indicators out of Europe come to the forefront.
Crude price direction is usually a very good guide for VLSFO
Putting some longer-term context into the Singapore VLSFO versus Brent relationship, the chart below illustrates monthly average price developments for these two commodities so far this year. It shows their very strong correlation and the range in pricing. When Brent crude was around $75/bbl, Singapore VLSFO was close to $575/mt. With recent crude prices rising to their highest levels so far this year and Brent in the low $90s, so monthly average Singapore VLSFO prices are at $660/mt and almost $100/mt above their mid-year lows.

In the near term, a lot of the movement in crude oil prices will be linked to what is happening in the Middle East, and so VLSFO price direction will be derived from these events. However, there are still nuances within the bunker market that we continue to monitor, not least the differences between VLSFO and HSFO.
In complete contrast to VLSFO, average prices for HSFO have fallen!
Unlike VLSFO prices closely tracking crude and moving higher over recent months, there has been a turning point in the HSFO market and prices have actually fallen. Whereas monthly average Singapore VLSFO prices are now $30/mt higher than in August, Singapore HSFO prices are $70/mt lower!

VLSFO and HSFO go in different directions
From the initial analysis, Singapore VLSFO closely tracks crude, so it is no surprise that the price relationship between these two are consistent. In fact, Singapore VLSFO is priced at close to 100% of Brent (on a weight basis) and this year has only varied within a very narrow range of 95-103%. If you go back three years, the relationship has been consistently tight and VLSFO has been within the 95-108% range of Brent in all but three months.

This is in complete contrast to HSFO pricing versus crude. Taking Singapore HSFO as a benchmark, its percentage of Brent shifted from around 65% at the start of the year to close to 80% by mid-year. It is no surprise that the HSFO/Brent relationship strengthened even further in July and August to close to 90%, as Saudi Arabia and Russia made additional, voluntary cuts in crude production/exports totalling 1.5 million b/d (all of which are medium and heavy grades). Consequently, HSFO supply was always going to be squeezed and its relative price likely to rise.
With statements that the Saudi (and Russian) production cuts would run through to the end of this year, it might have been the case that HSFO prices would continue to be supported, at least going into the fourth quarter. This hasn’t happened, and HSFO prices have already fallen sharply despite the Saudi Arabia and Russia strategy and heightened geopolitical risks in the Middle East.
Why has HSFO fallen relative to Brent?
HSFO pricing was always expected to weaken versus Brent, not least in anticipation of the rise in Saudi and Russian crude exports from January. However, the shift has been ‘early’ and the key trigger for the turnaround has centred on the Middle East and a recent substantial increase in HSFO exports.
HSFO is used in a number of power-generating plants in the Middle East and demand is high in the region during the summer months to meet air conditioning demand. As temperatures eased in October, ‘local’ demand for HSFO fell back. Consequently, HSFO exports from the UAE moved from virtually nothing in September, to indications of around 3 million bbls going to Singapore in the middle two weeks of October. On this basis we could expect the seasonal pattern of continued HSFO exports from the UAE until power-generating demand increases again Q2 next year.
In addition to this seasonal shift, there has also been a structural change in HSFO exports from Kuwait. Like the UAE, Kuwait has been burning HSFO in its power generating sector, with supplies coming from their domestic refineries as well as imported volumes. However, with the phased introduction of the massive, 615,000 b/d Al Zour refinery from late last year, it was always planned that the country would switch to using lower sulphur fuel oil as part of its Environmental Fuel Project (EFP). This is now in place and the agreement is for Al Zour to supply up to 225,000 b/d of low-sulphur material to the Kuwait Ministry of Electricity as part of their cleaner energy program.
This has therefore ‘freed-up’ Kuwaiti HSFO for export and also removed them as a buyer of HSFO from the international market on a permanent basis. These ‘additional’ HSFO volumes are moving to Asia and are another contributing factor to a weakening HSFO price.
It all means a widening VLSFO – HSFO price differential
Looking at the VLSFO and HSFO markets, it is clear the price spread between the two products has widened. With ‘incremental’ HSFO volumes available in the Middle East and moving into Singapore, the widening has been greater in these two bunker regions.
This has meant the VLSFO – HSFO spread in Singapore has shifted from an extreme low of only $80/mt in July and August to an average of $180/mt in October. This is still not back to levels seen at the start of this year, but the advantages for scrubber-fitted ships are clearly far better than they have been since March.

The price spread in Fujairah is very close to the Singapore differential, at around $175/mt in October. However, since the Russian invasion of Ukraine and the resulting ban on Russian products entering Europe (halting a substantial flow of HSFO), the VLSFO – HSFO price spread in Europe has typically been far smaller than in the Middle East and Asia. So, although the spread in Europe has widened, in Rotterdam it has only moved out to $80/mt in October, $100/mt less than in Singapore!
What next?
With the shifts in the HSFO pricing and additional heavier crudes expected to enter the market from the start of next year as Saudi Arabia and Russia remove their voluntary production cutbacks, we can expect ongoing relative downwards pressures on HSFO prices. In the near term, it remains to see what the geopolitical risk is on crude prices, which in turn will largely determine VLSFO pricing. Now the VLSFO – HSFO spread is far more attractive for owners of scrubber-fitted ships in the Middle East and Asia.
Photo credit and source: Integr8
Published: 31 October, 2023

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