Bunker Prices Fall as Ceasefire Eases Supply Fears

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  • LNG Emissions Could Be Cut by 60%, Says IEA.
  • Ammonia Seen as Leading Future Fuel in BIMCO Survey.
  • European Gas Storage Rises, TTF Benchmark Continues to Fall.

In Week 26, we saw a notable drop in global bunker prices, thanks to easing tensions in the Middle East. Alongside this, fresh data pointed to the potential for cutting emissions with LNG and a rising interest in alternative fuels like ammonia, showcasing how the shipping industry is evolving its priorities, reports LinkedIn.

Bunker Indices Take a Hit

During Week 26, the global bunker indices monitored by MABUX took a significant hit, primarily fueled by the hope that a ceasefire between Israel and Iran might alleviate oil supply issues in the region:

  1. 380 HSFO: Plummeted by USD 40.88, falling below the USD 500 threshold to USD 472.54/MT (down from USD 513.42/MT).
  2. VLSFO: Dropped by USD 24.29 to USD 560.20/MT (down from USD 584.49/MT).
  3. MGO: Decreased by USD 29.83, settling at USD 762.82/MT (from USD 792.65/MT).

Even with this weekly decline, there were signs of a potential upward correction at the time of reporting.

Global and Port-Level SS Trends

The MABUX Global Scrubber Spread (SS)—which measures the price difference between 380 HSFO and VLSFO—climbed by $16.59, moving from $71.07 to $87.66, surpassing the $80.00 mark. The weekly average also saw an increase of $5.76.

Looking at port-specific trends:

  1. Rotterdam: SS increased by $5.00 to $50.00, although the weekly average dipped by $6.50.
  2. Singapore: SS jumped by $8.00 to $85.00, breaking through the $80.00 barrier. The average saw a slight rise of $1.50.

Despite these gains, SS values are still below the $100.00 breakeven point, making conventional VLSFO a more economical choice compared to 380 HSFO with scrubbers. A moderate upward trend is anticipated to persist.

IEA: LNG Emissions Could Be Cut by Over 60%

The IEA has reported that emissions from the LNG supply chain, which currently sit at about 350 million tonnes of CO₂ equivalent (MtCO₂e) each year, could be slashed by over 60% with the technologies we already have at our disposal. Breaking it down, 70% of these emissions come from CO₂ produced during flaring and venting, while the remaining 30% is due to unburned methane. The IEA’s estimates suggest that:

  1. Tackling methane leaks could lead to a reduction of 90 MtCO₂e annually, which accounts for 25% of total LNG emissions, and half of that could be achieved at no extra cost.
  2. Cutting down on flaring could further decrease emissions by an additional 5 MtCO₂e each year.

Gas Storage Update

As of June 24, European gas storage was at 56.59% capacity, marking a 2.54% increase from the previous week, though it’s still down from 71.33% at the beginning of the year.

The European TTF benchmark saw a drop of €3.694/MWh, closing at €35.615/MWh, down from €39.309/MWh. Meanwhile, LNG bunker fuel prices in Sines, Portugal, increased by USD 55, reaching USD 914/MT, up from USD 839/MT. The price difference between LNG and conventional fuel has widened to USD 111 in favour of conventional fuel, compared to USD 83 previously. On June 23, MGO LS was priced at USD 803/MT in Sines.

Undervaluation Across All Fuels and Ports

At the end of Week 26, the MDI showed that all fuel types in all four key ports—Rotterdam, Singapore, Fujairah, and Houston—were undervalued.

380 HSFO Segment: Weekly MDI average increased by:

  1. +5 in Rotterdam
  2. +19 in Singapore
  3. +18 in Fujairah
  4. +3 in Houston

VLSFO Segment: Weekly MDI average increased by:

  1. +16 in Rotterdam
  2. +20 in Singapore
  3. +13 in Fujairah

Houston saw a decline of 3 points, but MDI remained near $100.00.

MGO LS Segment: All ports returned to undervaluation, with weekly MDI increases of:

  1. +24 in Rotterdam and Singapore
  2. +26 in Fujairah (remains above $100.00)
  3. +15 in Houston

This marks a complete shift to undervaluation across all ports and fuel types, a trend expected to continue into next week.

Alternative Fuel Readiness and Safety Concerns

A recent BIMCO survey, which took place during the Tanker Safety Network online meeting on June 12, shed light on future fuel preferences and the challenges ahead:

  1. 52% of those surveyed believe ammonia will be the leading bunker fuel by 2040.
  2. 38% highlighted fuel compatibility as the biggest operational hurdle.
  3. 28% raised concerns about safety risks onboard.
  4. 69% admitted they’re only somewhat ready for alternative fuels, having plans in place but lacking the means to put them into action.
  5. 52% view nuclear power as a feasible option, although its adoption is slowed down by regulatory issues.

Decarbonisation vs. Safety Systems

BIMCO concluded that while the push for decarbonisation is unavoidable, the safety systems and training frameworks within the shipping industry aren’t keeping pace with the new demands that are emerging.

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Source: LinkedIn