Fuel Switch Snapshot: B24-VLSFO $200/mt costlier than LNG

Freeport LNG plant has resumed operations

LNG is $34-46/mt cheaper than VLSFO in Rotterdam

B24-VLSFO HBE costs $201/mt more than LNG in Rotterdam

CHART: The dots represent bunker fuel prices adjusted for calorific contents to become VLSFO-equivalents, and with various estimated levels of EU ETS costs in 2024 excluded (Rotterdam) and included (Rotterdam to non-EU port and Rotterdam to EU port). ENGINE, PRIMA Markets, NYMEX

The front-month ICE Brent contract has declined by $1.50/bbl ($11/mt), which has weighed on conventional fuel prices over the past week.

The VLSFO-equivalent LNG bunker price in Rotterdam is $34/mt cheaper than its VLSFO. When accounting for the estimated EU Allowance (EUA) costs, LNG costs $40-46/mt less than VLSFO.

Conversely, LNG is priced $16/mt higher than VLSFO in Singapore with estimated EUA costs added, and $22/mt without.

The price premium of Rotterdam’s HBE-qualified B24-VLSFO over LNG has increased by $3/mt in the past week, now standing at $201/mt.

VLSFO

Rotterdam's VLSFO price has mostly followed Brent's movement over the past week.

Prompt VLSFO availability has tightened in Rotterdam and in the wider ARA hub due to bunker barge loading delays at some oil terminals, according to a trader. This has resulted in product shortages for some suppliers and prevented Rotterdam's VLSFO price from falling further.

Singapore’s VLSFO price has remained stable, with only a $2/mt decline over the past week.

Despite low bunker demand in Singapore, lead times for VLSFO have increased from 5-14 days last week to 12-18 days now due to limited barge availability, a source said.

Biofuels

Rotterdam’s B30-VLSFO HBE price has declined by $13/mt in the past week, while its B30-LSMGO HBE price has dropped by a greater $18/mt.

The two benchmarks have declined despite a steady price for palm oil mill effluent methyl ester (POMEME). PRIMA assessed the POMEME price in the ARA at $1,383/mt on Friday, unchanged from the previous week.

Singapore’s B24-VLSFO UCOME price has shed $5/mt in the past week, while its B24-LSMGO UCOME price has declined by a greater $10/mt.

PRIMA assessed the UCOME FOB China benchmark at $990/mt on Friday, unchanged from the previous week. The benchmark has remained steady even after the European Commission (EC) announced provisional tariffs on EU imports of Chinese biodiesel.

LNG

Rotterdam’s LNG price has inched lower by $2/mt over the past week.

The Freeport LNG plant in the US returned to full production on Sunday after being shut down in early July because of Hurricane Beryl. The Freeport LNG plant is the second-largest LNG exporter in the US, and about 5% of Europe's total LNG imports last year came from Freeport LNG, according to the Energy Information Administration (EIA).

Singapore’s LNG benchmark has increased by $4/mt over the past week. This slight uptick is attributed to increased buying activity in the cargo spot market, where LNG is purchased for immediate delivery rather than through long-term supply contracts.

By Konica Bhatt

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