Fuel Switch Snapshot: LNG and LBM prices come off against liquid fuels

B100 cheaper than VLSFO and LSMGO on EU-EU voyages

LBM could be the cheapest compliance option in the EU

Rotterdam’s VLSFO-equivalent B100 (100% biofuel) price has shed $23/mt in the past week, and $30-38/mt when estimated EU ETS and FuelEU Maritime impacts are added. VLSFO-equivalent B100 is priced at $1,335/mt in Rotterdam with a Dutch HBE rebate applied, and we estimate that it will cost a total of $679/mt to buy and burn it for ships sailing between two EU ports.

That is a $38/mt drop from $716/mt a week ago, and has narrowed B100’s premium over HSFO to $19/mt for EU-EU voyages. These prices include the impacts of EU ETS carbon costs and FuelEU penalties for consuming conventional fuels like HSFO, as well as an estimated FuelEU pooling benefit for B100.

With compliance costs and benefits included, Rotterdam’s B100 has moved to wider discounts of $50/mt to VLSFO and $124/mt to LSMGO.

For shipowners with dual-fuel Otto medium speed (Otto MS) LNG engine ships weighing a choice between VLSFO-equivalent LNG and biofuels on EU-EU voyages, LNG’s premium over B100 has dropped from $189/mt to $164/mt in the past week.

Liquefied biomethane (LBM) has also dropped in price against B100 under these conditions, now commanding a $126/mt discount, from $101/mt a week ago.

Liquid fuels

Rotterdam’s VLSFO price has dipped by $23/mt, outpacing an $18/mt drop in the front-month ICE Brent futures contract. The port’s VLSFO-equivalent B100 price has also fallen by $23/mt - before factoring in estimated EU compliance costs and benefits.

Once those compliance costs are included for EU-EU voyages, VLSFO’s decline shrinks to $19/mt, while B100’s drop increases to $38/mt.

Singapore’s VLSFO benchmark has taken a bigger hit, dropping by $34/mt without EU regulations in play, and by $32/mt with compliance on voyages between Singapore (non-EU) and EU ports.

Liquid gases

Rotterdam’s VLSFO-equivalent LNG price has continued on its downward streak, sliding by a massive $64/mt over the past week before factoring in EU compliance, and by $62/mt with them included for a ship with an Otto MS engine on an EU-EU voyage.

The decline has primarily been driven by a reduction in LNG bunker premiums over the Dutch TTF gas price, which has fallen from approximately $155/mt to $113/mt.

This latest drop brings Rotterdam’s LNG bunker cost for EU-EU voyages down by a total of $197/mt since it surged past $1,000/mt on 7 February.

Singapore’s VLSFO-equivalent LNG benchmark has held roughly steady, edging down by just $4/mt over the past week. This price reflects “sluggish demand in Northeast Asia,” according to the Japan Organization for Metals and Energy Security (JOGMEC). 

By Konica Bhatt

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