Fuel Switch Snapshot: Pooling slump erodes LBM’s compliance edge

FuelEU pooling values drop $25/mtCO2e

Rotterdam LBM swings to a premium over LNG

Dutch ZRE A tickets surge $75/mtCO2e

All bunker prices described in the text below have been adjusted for calorific content to make them VLSFO-equivalent. They have estimated EU-EU voyage compliance costs included for Rotterdam, and nonEU-EU compliance costs included for Singapore. These account for EU ETS costs and FuelEU Maritime penalties, and the average price of compliance surpluses we have picked up from the FuelEU pooling market over the past week.

ENGINE-assessed FuelEU Maritime pooling values have dropped by €21.70/mtCO2e ($25/mtCO2e) to €86.90/mtCO2e ($97/mtCO2e) over the past week. This sharp drop has undercut the value of the compliance surplus generated from using liquefied biomethane (LBM) and B100 on EU-EU and nonEU-EU voyages.

Some suppliers have been offering FuelEU compliance surplus at €100-130/mtCO2e ($112-146/mtCO2e), sources told ENGINE, well above this week’s ENGINE-assessed value.

LBM’s potential pooling values for EU-EU voyages have dropped by $74-87/mt depending on engine type. That has added to a $205-214/mt rise in LBM prices over the past week.

B100’s potential pooling value for EU-EU voyages has slumped by $72/mt in the same period.

For nonEU-EU voyages, a smaller $36/mt drop in B100’s potential pooling value has pushed Singapore’s B100 prices up by $30/mt over the past week.

The slide in the FuelEU pooling values continues a downtrend that OceanScore flagged in its September report.

Sellers cut their surplus offers after the summer as more of them competed for buyers, including new entrants. Surplus supply kept outstripping demand and low costs of generating surplus gave sellers room to price aggressively, OceanScore explained.

Some deals even closed below the cost of generating a surplus, which OceanScore saw as a sign of “market overshooting.”

Rotterdam LBM’s premiums over VLSFO have widened by $167-176/mt to $400-516/mt and its discounts to LSMGO have narrowed by $103-112/mt to $120-236/mt depending on engine type over the past week.

LBM’s premiums over B100 have widened by $250-259/mt to $484-600/mt depending on engine type.

Liquid fuels

Rotterdam’s VLSFO has gained $38/mt, HSFO has gained $69/mt and LSMGO $102/mt over the past week. Its B100 has dropped by $45/mt.

Rotterdam’s B100 has flipped from a $90/mt premium over HSFO to a $24/mt discount over the past week.

B100’s discount to VLSFO in Rotterdam has widened by $83/mt to $84/mt and its discount to LSMGO has widened by $147/mt to $720/mt.

B100’s wide discount to LSMGO has lifted demand for B100 in Rotterdam, a trader said. Prompt availability has been tight in the ARA ports, with lead times of around 5-7 days recommended, the trader added.

Dutch ZRE A tickets have surged by €67.50/mtCO2e ($75/mtCO2e) to €240/mtCO2e ($269/mtCO2e) over the past week. The uptick followed trades at higher prices and stronger bids towards the end of the week, Prima Markets said.

Singapore’s conventional fuel prices have gained $1-54/mt, with HSFO up the most. B100 prices have risen by $30/mt. The port’s bunker market has been tight for VLSFO and HSFO, with lead times of around 10-15 days advised, a Singapore-based source said.

B100’s premium over VLSFO in Singapore has widened by $12/mt to $337/mt. B100 has swung from level with LSMGO a week earlier to a $29/mt premium over it.

Liquid gases

Rotterdam’s LNG prices have gained $115-125/mt depending on engine type, while LBM prices have climbed $205-214/mt.

LNG’s premiums over VLSFO in Rotterdam have widened by $77-87/mt to $362-474/mt depending on engine type. LNG’s discounts to LSMGO have narrowed by $13-23/mt to $163-274/mt.

Rotterdam’s LBM has swung from $47-51/mt discounts to LNG to $38-42/mt premiums depending on engine type. Its potential pooling values have dropped by $74-87/mt, far more than the $13/mt drop in LNG’s potential pooling value for vessels with diesel slow speed (diesel SS) engines.

Singapore’s LNG prices have gained $25-30/mt depending on engine type. LNG’s premiums over VLSFO in the port have widened by $7-12/mt to $308-364/mt.

In Singapore, LNG’s discount to LSMGO for vessels with diesel SS engines has narrowed by $29/mt to just $1/mt, as LNG (diesel SS) has gained $30/mt and LSMGO just $1/mt.

By Konica Bhatt

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