Fuel Switch Snapshot: LNG-biofuel price gap widens

VLSFO tightness persists in two major ports

Rotterdam’s LNG price plunges

Singapore's LNG priced $67/mt lower than B24-VLSFO

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

A sharp decline in Rotterdam’s LNG price has shifted the benchmark from a $15/mt premium over LSMGO to a $2/mt discount in the past week, excluding estimated costs for EU Allowances (EUAs) to cover the emissions from burning it.

When factoring in EUAs, Rotterdam’s LNG is now at an $8-14/mt discount to its LSMGO.

In contrast, Singapore’s LNG remains $30/mt more expensive than LSMGO without EUAs, and $24/mt higher with EUAs included.

The LNG-biofuel price gap in Singapore has widened by a significant $35/mt over the past week, with VLSFO-equivalent LNG now $67/mt cheaper than B24-VLSFO UCOME.

Rotterdam LNG’s discount to a B24-VLSFO HBE blend has gone up by $15/mt to reach $61/mt.

Despite the recent price drop, LNG is $107/mt more expensive than VLSFO in Rotterdam without EUAs, and $96-101/mt more with EUAs. In Singapore, LNG costs $93/mt more than VLSFO without EUAs, and $88/mt more with.

VLSFO

Rotterdam’s VLSFO benchmark has dropped by $19/mt and Singapore’s by $7/mt in the past week.

These declines have followed a $2.95/bbl ($22/mt) drop in the front-month ICE Brent futures contract, which exerted downward pressure on VLSFO prices at both ports.

However, tight fuel availability in Rotterdam and Singapore has partially offset this decline in both the ports. In Singapore, rising VLSFO demand has provided additional support to the price and limited the overall reduction.

Biofuels

Rotterdam’s B24-VLSFO HBE has dropped by $15/mt while its B24-LSMGO HBE grade has declined by a similar $12/mt. 

The theoretical Dutch rebate for biofuel continues to climb. PRIMA Markets assessed the price for advanced HBE tickets at €12/GJ ($13.08/GJ) on Friday, up from €10.70/GJ ($11.68/GJ) a week prior..

Singapore’s B24-VLSFO UCOME price has shed $3/mt in the past week. Its B24-LSMGO UCOME price has jumped by $29/mt amid a $36/mt increase in the underlying conventional ENGINE LSMGO price.

One biofuel bunker supplier has been particularly active in the spot market recently, a source said.

Several suppliers in Singapore set B24-VLSFO prices by adding a biofuel premium of around $140-160/mt to the FOB VLSFO cargo price.

LNG

Rotterdam's LNG bunker price plunged $31/mt lower and Singapore's LNG bunker price dropped by a smaller $14/mt in the past week.

Expectations of improved supply from a new gas agreement between European buyers and Azerbaijan have exerted downward pressure on the front-month NYMEX Dutch TTF Natural Gas benchmark, with a knock-on impact on bunker prices.

Meanwhile, a seasonal drop in Asian gas demand, coupled with high inventories and subdued buying activity, has weighed on Singapore’s LNG bunker price.

By Konica Bhatt

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