Fuel Switch Snapshot: Costlier Brent pushes VLSFO higher

VLSFO prices rise sharply with Brent

LNG $300/mt cheaper than biofuel in Rotterdam

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

VLSFO

Rotterdam and Singapore's VLSFO benchmarks have risen sharply in the past week, tracking ICE Brent futures' steep rise of $4.49/bbl ($32.91/mt).

Rotterdam's VLSFO benchmark has gone up by $29/mt. Availability of the fuel grade remains normal in the port and 4-5 days of lead time are still recommended.

Singapore’s VLSFO benchmark has increased by $15/mt. Its VLSFO availability remains tight for prompt delivery. Most suppliers recommend lead times of up to 14 days, but some can accommodate stems within five days in the port.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has surged by $26/mt in the past week. Biofuel bunker demand in the port has been stable in the spot market, one source says. Another source has not seen any demand recently.

A palm oil mill effluent methyl ester (POMEME) cargo was priced at $1,405/mt in the ARA region on Friday, according to PRIMA Markets. This price has gained around $19/mt over the past week, PRIMA Markets said. POMEME-based biofuels can qualify for advanced biofuel rebates through the Dutch HBE system.

Singapore’s B24-VLSFO UCOME bunker price has climbed $14/mt higher over the past week.

“A domestic producer of the renewable fuel pinned the offer and asking price for UCOME FOB China in bulk ‘strongly’ at $1,050/t [$1,050/mt],” PRIMA Markets reported. “Other sources reported increasingly higher offer levels for same product up to $1,100/t [$1,100/mt], highlighting uncertainty in assigning valuation, as producers and traders in the East Asian country continue to see little demand or interest for trades.”

Singapore relies heavily on Chinese UCOME imports and higher Chinese UCOME prices can raise UCOME prices in the Singapore market.

LNG

Rotterdam’s LNG bunker benchmark has declined by $10/mt in the past week. The price has mirrored a $11.99/mt fall in the front-month NYMEX Dutch TTF Natural Gas benchmark and comes amid persistently high gas storage levels.

European gas storage levels are at 58% and have exceeded expectations, ING's Warren Patterson commented. He pointed to milder weather in the northern hemisphere capping draws.

Low seasonal demand in "shoulder months" like April will usually weigh down on LNG prices, a trader points out.

Rotterdam’s LNG discount to its VLSFO has widened by $39/mt to $170/mt over the week. Its LNG bunker price is now more than $300/mt cheaper than its B24-VLSFO benchmark price.

Singapore’s LNG bunker benchmark has remained unchanged in the past week. Singapore’s LNG discount to its VLSFO has widened by $15/mt to $113/mt in the past week.

By Konica Bhatt and Erik Hoffmann

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