At the close of Week 24, the global bunker indices published by MABUX demonstrated a moderate upward trend across all major fuel grades. This continues a pattern of slight gains in the bunker market.
Global Scrubber Spread
The latest market analysis indicates subtle, multidirectional movements in the MABUX Global Scrubber Spread (SS), which represents the price difference between 380 HSFO (High Sulfur Fuel Oil) and VLSFO (Very Low Sulfur Fuel Oil). Despite minor fluctuations, VLSFO remains the more cost-effective option for shipping, as the SS Spread consistently stays below the $100.00 breakeven point for scrubber installations.
Key Bunker Fuel Market Trends:
- Global Scrubber Spread (SS): The SS slightly decreased by $0.62 this week, settling at $74.27 from $74.89. However, the average weekly value saw a modest increase of $2.45.
- Rotterdam: The SS Spread in Rotterdam rose by $1.00 to $49.00 from $48.00, with its average weekly value also up by $2.67.
- Singapore: In contrast, Singapore experienced a $3.00 decline in its 380 HSFO/VLSFO price difference, moving from $70.00 to $67.00. Nevertheless, the port’s average weekly value increased by $4.17.
- Outlook: Overall, the SS Spread dynamics show no clear trend, with minor, multidirectional movements. No significant changes are anticipated in the coming week.
European LNG Market Dynamics:
Europe’s significant reliance on spot LNG imports is projected to continue through 2030, despite a 17% decline in import volumes last year (22 bcm). Since 2022, the EU has remained the world’s largest LNG importer, surpassing both China and Japan. This heavy reliance is a key factor in global gas markets.
- Diversification Efforts: Efforts are actively underway to diversify and expand LNG imports, particularly from Qatar and various African projects. These strategic moves are expected to boost demand for seaborne transport and, consequently, support higher freight rates in the shipping industry.
- New Trade Routes: Recent agreements between European buyers and Australian producers suggest that LNG shipments from Australia to Europe could commence shortly, further contributing to seaborne trade.
- Gas Storage and Prices: As of June 10, European regional gas storage facilities were 51.79% full, representing a 2.59% increase from the previous week. However, this is still 19.54% lower compared to the beginning of the year (71.33%). The gradual replenishment of storage continues. The European gas benchmark TTF (Title Transfer Facility, a virtual trading point for natural gas in the Netherlands and a primary benchmark for European gas prices) continued its moderate decline by the end of Week 24, falling by €1.210/MWh to €34.638/MWh from €35.848/MWh the previous week.
Market Differential Index
Over Week 24, the MABUX Market Differential Index (MDI), which gauges the correlation between actual market bunker prices (MBP) and the MABUX Digital Bunker Benchmark (DBP), displayed varied trends across different fuel segments:
380 HSFO Segment:
- Overvalued Zone: Rotterdam and Singapore remained in the overvalued zone. Their average weekly MDI values declined by 8 and 6 points, respectively, indicating a slight movement towards more accurate pricing relative to the DBP.
- Undervalued Zone: In contrast, Fujairah and Houston remained in the undervalued zone. Their average MDI values increased by 8 and 18 points, respectively, suggesting a reduction in their undervaluation.
- Correlation: Notably, the MDIs for both Rotterdam and Singapore are now approaching the 100% correlation level between MBP and DBP, indicating that their market prices are closely aligning with the digital benchmark.
VLSFO Segment:
- Shift to Undervalued: Rotterdam notably moved into the undervalued zone, meaning all four analyzed ports (Rotterdam, Singapore, Fujairah, and Houston) are now considered undervalued in the VLSFO segment.
- Increasing MDI Values: The average MDI values showed increases across the board: Rotterdam (+5 points), Singapore (+3 points), Fujairah (+11 points), and Houston (+10 points). This generally points to a narrowing of the undervaluation gap in these ports.
- Approaching Correlation: Similar to the HSFO segment, both Rotterdam and Singapore are approaching 100% correlation between their MBP and DBP for VLSFO.
MGO LS Segment:
- Shift to Undervalued: Rotterdam also transitioned into the undervalued zone for MGO LS, joining Singapore, Fujairah, and Houston. This means all four ports are now undervalued in the MGO LS segment.
- Increasing MDI Values: Average weekly MDI values increased in all locations: Rotterdam (+15 points), Singapore (+7 points), Fujairah (+19 points), and Houston (+12 points).
- Correlation and Threshold: Rotterdam’s MDI continues to remain close to the 100% correlation mark, while Fujairah’s MDI has surpassed the $100.00 threshold, indicating a significant undervaluation relative to the DBP.
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Source: MABUX on LinkedIn
