For dual-fuel LNG-capable vessels without scrubbers sailing outside of 0.10% sulphur-capped Emission Control Areas (ECAs), VLSFO grade has been a more cost-effective choice than LNG in Rotterdam for four months now. For vessels of this kind sailing within ECAs, LSMGO has often been a more attractively priced option than LNG over the past three months, but it has been on and off, reports Engine.
Energy content
This is when we compare the grades as VLSFO-equivalents on energy content, which is what matters for how far a vessel can sail on a quantity of fuel.
Rotterdam’s VLSFO-equivalent LNG was last at a discount to VLSFO in late July, and has since pulled ahead to wide premiums. LNG was competitive with LSMGO (both as VLSFO-equivalents) in early November and has since shot up to premiums.
LNG’s premium over LSMGO is slightly narrower at $45/mt with estimated EU Allowance (EUA) costs added – which favours LNG’s lower CO2 emissions – for voyages between EU ports and non-EU ports. Voyages between two ports require more EUAs to be surrendered, and with the estimated costs of those extra EUAs added LNG’s premium over LSMGO drops to $38/mt.
VLSFO
Front-month ICE Brent rallied 6% higher last week on continuous support from the ever-escalating Russia-Ukraine war. On Thursday last week, Russian President Vladimir Putin announced that Russia had fired a ballistic missile at Ukraine and warned of a potential global nuclear war, increasing fears of oil supply disruptions, Reuters reported.
VLSFO availability tightened in Singapore, with lead times at 6-11 days compared to the previous week’s 2-8 days. LSMGO requires lead times of 4-9 days, up from 2-6 days the previous week.
Biofuels
Rotterdam’s B30-VLSFO HBE bunker benchmark has gone up by $13/mt in the past week, while rallying LSMGO levels have pushed B30-LSMGO HBE up by a greater $25/mt.
The port’s B30-VLSFO UCOME benchmark has gone the other way, shedding $35/mt on the week and coming within $160/mt of HBE-rebated B30-VLSFO.
In Singapore, an $18/mt gain for B24-LSMGO UCOME has been more than twice the $7/mt gain for B24-VLSFO UCOME.
Singapore remains a key market for Chinese UCOME cargo imports, with PRIMA Markets noting offers of UCOME FOB China in bulk at $1,020/mt on Friday. That was $180/mt lower than what a supplier indicated pure B100 UCOME at for bunkering in Singapore that day.
LNG
Rotterdam’s LNG bunker price has made a marginal rise of $4/mt to $853/mt – the highest it has been in over a year. The underlying front-month Dutch TTF Natural Gas contract settled at $13.92/MMBtu ($841/mt) on Thursday last week, a level not seen since October 2023.
Did you Subscribe to our daily newsletter?
It’s Free Click here to Subscribe!
Source: Engine
