Fuel Switch Snapshot: Gas no longer looks good

Bunker fuel prices rise across the board

VLSFO supply becomes tighter in Singapore

LNG now $24-62/mt costlier than LSMGO

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 VLSFO-equivalent LNG now commands a premium of $108/mt over VLSFO in Rotterdam, and $86/mt over VLSFO in Singapore.

Rotterdam's LNG bunkers is priced at a $24/mt premium over its LSMGO. This significant increase from the $1/mt premium seen last week can largely be attributed to a sharp increase for LNG. In Singapore, LNG is at an even bigger $62/mt premium over LSMGO.

Dual-fuel ships can now bunker either VLSFO or LSMGO at a lower cost than fossil LNG in Singapore and Rotterdam. HSFO remains the cheapest alternative for scrubber-fitted ships in both ports.

LNG’s discount to B24-VLSFO (HBE) in Rotterdam has narrowed from $71/mt to $55/mt in the past week.

Conversely, Singapore LNG’s discount to its B24-VLSFO has widened by $9/mt to $39/mt during the same period.

If we include estimated costs for EU Allowances (EUAs), B24-VLSFO is only $33/mt more expensive than LNG in Singapore, and $44-50/mt more expensive in Rotterdam.

VLSFO

Singapore and Rotterdam’s VLSFO benchmarks have gone up and defied a $15/mt drop in front-month ICE Brent futures over the past week.

The ARA region has seen slightly more VLSFO demand over the past week compared to the previous one, according to a source. This has exerted upward pressure on the port’s VLSFO benchmark, pushing it $15/mt higher.

VLSFO cargoes have been in short supply in Singapore, two sources said. Tight barge availability has also contributed to tighten VLSFO bunker supply in the port, a source said. Lead times of up to 10-13 days are now recommended by several suppliers. Some suppliers can deliver stems with shorter lead times, but these stems are usually priced higher.

This tight supply has driven Singapore’s VLSFO price $27/mt higher over the past week, and it has come despite the decline in Brent.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has made a solid gain of $14/mt on the week, supported by increases for both POMEME biofuel and conventional VLSFO.

PRIMA Market’s POMEME CIF ARA price has risen by $13/mt, while ENGINE’s conventional VLSFO price has come up by $15/mt.

Singapore’s B24-VLSFO price has increased by $21/mt, following a $27/mt rise in the underlying ENGINE conventional VLSFO price and a steady bio-component price.

For the bio component of the B24-VLSFO blend, PRIMA Market’s underlying UCOME FOB China price has held steady at $960/mt. The freight rate from China to Singapore for an MR tanker has come off by $1.75/mt.

LNG

Rotterdam’s LNG bunker price has surged by $30/mt in the past week. The underlying Dutch TTF Natural Gas contract has rolled over from the September to the higher-priced October contract, which has contributed to a rise in the TTF benchmark.

Rotterdam’s LNG price has also been boosted by disruptions in gas supply due to infrastructure maintenance at Norway's Troll gas field.

Singapore's LNG bunker price has climbed by $12/mt in the past week. This increase is largely attributed to high LNG demand from China and Japan, driven by unusually hot weather.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online