This week’s analysis by MABUX covers the continued moderate downward trend in global bunker fuel indices, the narrowing of the scrubber spread, and key developments in the LNG and natural gas markets.
Global Bunker Price Trends (Week 43)
The global bunker indices continued their moderate downward movement:
- 380 HSFO Index: Declined by $14.74, closing at $434.04/MT.
- VLSFO Index: Slipped by $6.84, closing at $501.35/MT, moving closer to the $500/MT level.
- MGO Index: Eased by $3.90, closing at $754.69/MT.
- Market Status: Signs of an upward correction were beginning to emerge in the global bunker market at the time of reporting.
Global Scrubber Spread (SS) Analysis
The MABUX Global Scrubber Spread (the price difference between 380 HSFO and VLSFO) continued to narrow, supporting the profitability of conventional VLSFO:
- Global SS Spread: Narrowed by $2.10 to $67.31, moving further away from the $100.00 “breakeven” mark.
- Rotterdam Spread: Posted a moderate increase of $4.00, up to $28.00, but remained near its minimum levels for October 2024.
- Singapore Spread: Fell by $6.00, down to $62.00.
- Outlook: The gradual narrowing of the SS Spread is the prevailing trend and is expected to persist into the next week, favoring conventional VLSFO.
LNG and Natural Gas Market Developments
Developments in the natural gas market, a key driver for LNG bunker fuel, showed mixed signals:
- North American LNG Capacity: The U.S. Energy Information Administration (EIA) projects North American LNG export capacity to more than double by 2029, from approximately 14 billion cubic feet per day (bcf/d) in 2024 to over 29 bcf/d. North America is expected to supply nearly 40% of global LNG volumes by the end of the decade.
- European Gas Storage: European regional gas storage was 82.83% full, recording the first weekly decline (0.26%) since April, indicating the start of the seasonal drawdown phase.
- TTF Gas Benchmark: The European gas benchmark TTF reversed its downward trend, rising by 0.399 euros/MWh to 32.200 euros/MWh.
- LNG Bunker Price (Sines): The price for LNG bunker fuel at the port of Sines, Portugal, posted a moderate gain of $3.00, reaching $735/MT.
- Conventional vs. LNG Differential: This price increase widened the price differential between LNG and conventional bunker fuel (MGO LS at $697/MT), with conventional fuel holding a $38 advantage, up significantly from $10 the previous week.
MABUX Market Differential Index (MDI)
The MABUX Market Differential Index (MDI) indicated the following relationships between market bunker prices (MBP) and the MABUX digital bunker benchmark (DBP) at major global hubs:
- 380 HSFO Segment:
- Overvalued: Fujairah and Houston.
- Undervalued: Rotterdam and Singapore.
- VLSFO Segment:
- Overvalued: Houston.
- Undervalued: Rotterdam, Singapore, and Fujairah.
- MGO LS Segment:
- Overvalued: Singapore and Fujairah.
- Undervalued: Rotterdam and Houston.
- Correlation Proximity: MDI readings for 380 HSFO in Rotterdam and Fujairah, and MGO LS in Rotterdam and Houston, were all reported as being close to the 100% correlation mark between MBP and DBP.
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Source: MABUX on LinkedIn
