Fuel Switch Snapshot: LBM retains B100 discounts

B100 widens its price edge to HSFO

LBM costs less than B100, even with Otto MS engines

Rotterdam's VLSFO-equivalent price of B100 (100% biofuel) has shed $20/mt in the past week and moved to a wider $30/mt discount to HSFO, which has dropped by $14/mt. These prices account for EU ETS compliance costs and FuelEU Maritime penalties and pooling benefits for voyages between two EU ports.

The price premium of Rotterdam's VLSFO over B100 for a voyage between two EU ports has also widened, increasing from $94/mt last week to $98/mt now.

Only a few dual-fuel shipowners will directly choose between liquid biomethane (LBM) and B100, as these fuels typically serve different vessel segments. But for those still considering both options, EU regulations have now made LBM cheaper than B100 in Rotterdam, regardless of the gas engine type.

When used in an Otto medium speed (Otto MS) engine with a 3.1% methane slip and factoring in theoretical pooling benefits along with EU ETS compliance savings, the real bunkering cost of LBM now stands at a $5/mt discount to B100.

For ships using a diesel slow speed (diesel SS) engine, LBM’s discount to B100 has held steady at $130/mt.

Liquid fuels

Rotterdam and Singapore’s VLSFO benchmarks have remained steady over the past week amid a slight $2/mt decline in front-month ICE Brent futures.

Rotterdam’s VLSFO price has dropped by just $2/mt in the past week, with prompt supply remaining tight across the wider ARA hub.

Singapore’s VLSFO price has also declined, falling by $4/mt. Bunker demand in the port has been slow over the past two weeks, according to a source. This, combined with improving VLSFO availability, has pushed the price slightly below Brent’s decline.

Liquid gases

Rotterdam’s VLSFO-equivalent LNG price has slipped $20/mt lower in the past week. The decline was driven by a near 3% drop in the front-month Dutch TTF Natural Gas contract.

The price decline could be attributed to "the potential softening of EU storage targets, peace talks with Russia and milder weather forecasts for northwest Europe," according to Greg Molnár, gas analyst at the International Energy Agency.

Singapore’s VLSFO-equivalent LNG benchmark has shed a greater $33/mt. According to Rystad Energy, the Asian LNG benchmark “largely tracked the bearish trend from Europe but were influenced by more nuanced fundamentals.”

By Konica Bhatt

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