- Sluggish VLSFO demand in Rotterdam.
- Singapore suppliers sell less biofuel blends.
- Stiffer competition benefits LNG buyers in the ARA.
Prices of all bunker fuel options, including VLSFO, biofuels and LNG, have decreased in both Rotterdam and Singapore, reports Engine.
Rotterdam’s VLSFO premium over LNG has inched higher by $2/mt in the past week, making VLSFO $37/mt costlier than LNG. When we add the estimated EU Allowance (EUA) costs, Rotterdam’s LNG is $49/mt cheaper than VLSFO for voyages between two EU ports.
Rotterdam’s bio premiums over pure VLSFO and LNG have also decreased somewhat in the past week, but the price gaps still remains significant. Bunkering a B24-VLSFO blend will now be $173/mt costlier than bunkering VLSFO and $209/mt more than LNG in the port.
The B24-VLSFO premium over pure VLSFO shrinks to $150-161/mt when factoring in the estimated EUA costs, as the 24% biofuel component in that blend does not incur any carbon costs in the EU Emissions Trading System (ETS).
VLSFO
Rotterdam and Singapore’s VLSFO prices have largely followed a $1.51/bbl ($11/mt) decline in front-month ICE Brent futures in the past week.
Rotterdam has seen a slump in VLSFO bunker demand, but availability remains normal. These factors may also have exerted some downward pressure on the port’s benchmark.
Very prompt availability (0–2 days) in Singapore remains tight, with most suppliers suggesting lead times of 7-11 days. This tightness may have capped deeper losses in Singapore’s VLSFO price.
Biofuels
A $32/mt slump in the price of palm oil mill effluent methyl ester (POMEME) and an $11/mt drop in Rotterdam’s VLSFO price have pushed the price of a B24-VLSFO HBE biofuel blend in the port lower by $18/mt over the past week.
The price of B30-VLSFO UCOME in the ARA has declined in tandem with that of B30-VLSFO HBE in Rotterdam in the past week. This means that the price of a UCOME blend is still unattractive at a $70/mt premium over the rebated HBE price.
Singapore’s B24-VLSFO UCOME price has seen only a modest $4/mt decline in the past week.
Spot bio-bunker demand remains low in Singapore, two sources said. Around 48,000 mt of bio-blended bunkers was a sold in June, down from 54,000 mt in May, according to official data from the Maritime and Port Authority of Singapore.
LNG
LNG bunker prices have dropped alongside falling delivery margins in Rotterdam and weaker summer demand in Singapore. Rotterdam’s LNG price drop has outpaced Singapore’s by $26/mt to widen Rotterdam’s discount to $141/mt.
Rotterdam’s price has made a sharp $34/mt drop on the week. Part of this drop has come as a result of a sharp decline in the front-month NYMEX Dutch TTF Natural Gas contract, which continues to languish below $11/MMBtu ($572/mt) with downward pressure from 80% full European gas storage levels.
But it has also fallen because LNG bunker delivery costs are estimated to have gone down by $18/mt on the week, to $99/mt. More suppliers have been offering on LNG enquiries and this boosts competition in favour of negotiating prices down, a source says.
Singapore’s LNG bunker price has come down by $8/mt in the past week, driven by a NYMEX Japan/Korea Marker (JKM) price that has been pulled lower by weak cargo demand from South Korea and Japan.
In South Asia, and particularly India, monsoon rains have led to cooler weather, which has decreased electricity demand from the power sector, Rystad Energy said.
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Source: Engine
