Fuel Switch Snapshot: LNG Costlier Than VLSFO

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LNG bunker benchmarks in Rotterdam and Singapore continue to rise sharply.

With estimated EU Allowance (EUA) costs included in bunker fuel costs, Singapore’s LNG bunker price has surged $34-37/mt in the past week after a $29-30/mt jump the week prior.

After adjusting the price for calorific contents to become VLSFO-equivalent, Singapore’s LNG price has flipped to a premium of $29-36/mt over its VLSFO in the past week, from a $30-36 discount noted a week prior.

Rotterdam’s fossil LNG bunker price has closed even further on VLSFO by $33-34/mt over the past week, making it only $20-33/mt cheaper than VLSFO now.

VLSFO

Rotterdam’s VLSFO price has mostly followed Brent’s downward movement over the past week. Rotterdam’s VLSFO benchmark has declined by $11-18/mt in the past week, depending on whether the estimated EUA costs are included.

Availability of VLSFO is normal in Rotterdam, with lead times of 3-5 days recommended to ensure full coverage from suppliers, a trader said.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has inched $5/mt higher in the past week. When we add estimated EUA costs, the price has gained $8-10/mt, depending on whether we are looking at voyages between EU ports or between EU ports and non-EU ports.

A huge gain in the price of palm oil mill effluent methyl ester (POMEME) feedstock – qualified for Dutch HBE rebates – has pushed the price higher. PRIMA-assessed POMEME price in the ARA has jumped by $70/mt to $1,368/mt in the past week.

The price has declined amid a $10/mt drop in UCOME FOB China, according to PRIMA Markets. Chinese biodiesel exports to the EU are being investigated by the European Commission for “unfairly traded biodiesel”. The ongoing investigation has dented Chinese biodiesel inflows into European countries.

LNG

Rotterdam and Singapore’s LNG bunker prices have seen significant upticks in the past week.

Rotterdam’s LNG bunker benchmark has climbed $16-22/mt higher, depending on whether estimated EU ETS costs are included in the cost of fuel. This increase has been driven by the underlying front-month NYMEX Dutch TTF Natural Gas benchmark, which has seen an uptick due to heavy maintenance activities at Norwegian gas facilities.

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Source: Engine.online