Biofuel Bunker Snapshot: Singapore’s B24 premium over VLSFO widens

Less spot demand in Singapore and the ARA hub

Singapore’s bio-bunker sales dropped by 11% in June

Singapore

Singapore’s B24-VLSFO UCOME price has declined by $4/mt in the past week, while its B24-LSMGO UCOME price fell by $15/mt. The two bio-bunker prices have declined despite a $20/mt increase in the UCOME FOB China benchmark, according to PRIMA Markets.

Some offers for UCOME FOB China were noted above $1,000/mt last week, which contributed to lift this cargo price benchmark higher, PRIMA said.

Spot demand for delivered bio-bunkers remains low in Singapore, two sources said. Around 48,000 mt of bio-blended bunkers was sold in June, down from 54,000 mt in May, according to official data from the Maritime and Port Authority of Singapore.

Several suppliers in Singapore determine their B24-VLSFO prices by adding a biofuel premium to the price of the VLSFO component, which is typically based on a FOB VLSFO cargo price. The biofuel premiums have varied widely among suppliers and can depend on product availability and whether the bunker tankers are carrying bio-products, a trader said.

Biofuel premiums ranging between $120-160/mt were quoted by suppliers last week, a source said.

Singapore’s B24-VLSFO price premium over pure VLSFO has widened by $11/mt on the week to $120/mt.

Delivered B100 (100% biofuel) was indicated at $1,150/mt last week in Singapore. Only a few suppliers in Singapore, such as Vitol, which operates an IMO type 2 chemical tanker, can supply biofuel blends exceeding B25 (25% biofuel).

Bunker suppliers in major bunker hubs such as Singapore are compelled to offer B24 blends because they are comfortably below the IMO’s 25% carriage limit, unless they are supplied via chemical tankers. More suppliers are gradually opting for chemical bunker tankers instead of traditional oil tankers in order to supply methanol and bio-blends above B25.

Fratelli Cosulich did also recently take delivery of an IMO type 2 chemical tanker in Singapore, which it has chartered to commodity trader and bunker supplier Trafigura. As of now, we are unable to supply blends above B25 as our sole chemical tanker has been chartered out, a source from the company told ENGINE.

Fratelli has also placed orders for two additional IMO type 2 chemical tankers, but it has not specified whether these vessels will be chartered out or retained in its fleet. And it remains unclear where these two vessels will be deployed upon delivery.

Rotterdam

Rotterdam’s B30-VLSFO HBE price has come down by $19/mt in the past week, while its B30-LSMGO HBE price has dropped by a greater $34/mt. Declining prices for palm oil mill effluent methyl ester (POMEME) have seemingly pulled Rotterdam's delivered bio-bunker prices sharpy down with them.

The PRIMA-assessed POMEME price in the ARA has declined by $32/mt in the past week, to $1,416/mt. POMEME is one of the most popular advanced biofuel feedstocks as it can qualify for Dutch HBE units, which hold value for bunker suppliers and can translate into price rebates for buyers.

PRIMA has assessed HBE A tickets at €8.35/GJ ($9.09/GJ), up by €0.10/GJ ($0.11/GJ) on the week. This could theoretically mean a $2/mt higher rebate for B30 blends sold in the Netherlands.

The rebate is around $81/mt now for B30 blends, down from the peak level of $93/mt seen in early April. But it still makes it lucrative to bunker advanced biofuel blends in Dutch ports compared to ports in Belgium and other countries without equivalent HBE systems.

Biofuel price premiums over pure conventional fuels in Rotterdam are $198/mt for B30-VLSFO HBE blends and $148/mt for B30-LSMGO HBE blends. These premiums have remained roughly steady in the past week and are still significantly wider than Singapore's.

The ARA's price of B30-VLSFO UCOME has declined in tandem with the B30-VLSFO HBE price in Rotterdam in the past week. This has meant that the UCOME blend remains unattractive at a $70/mt premium over the rebated HBE price.

Gibraltar’s B24-VLSFO UCOME price was indicated at $804/mt on Friday, down by $15/mt on the week. There is not much bio-bunker demand in the Mediterranean port, a trader said.

By Nithin Chandran

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