Fuel Switch Snapshot: Rotterdam’s Price Surge More Than Singapore

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  • The recent decline in front-month ICE Brent futures by $6.54 per barrel has exerted downward pressure on conventional fuel prices.
  • Despite this, Rotterdam’s LNG bunker price has seen a significant increase, rising by $26 per metric ton (mt) to reach $616/mt.
  • This surge can be attributed to the underlying Dutch TTF Natural Gas contract rolling from the May contract to the higher-priced June contract, resulting in a slight increase in the TTF benchmark.

A sharp $6.54/bbl ($48/mt) drop in front-month ICE Brent futures has pulled conventional fuel prices significantly lower in the past week.

Rotterdam B24-VLSFO price premium over its VLSFO has increased by $28/mt to $145/mt, and its premium over LSMGO has increased by $15/mt to $18/mt.

Singapore’s B24-VLSFO price has slumped $24/mt lower on the week. Its price drop has outpaced that of Rotterdam’s equivalent grade by $10/mt. Rotterdam is still the cheapest port to bunker biofuels out of the two, but its discount for B24-VLSFO has shrunk to $32/mt.

LNG is now at considerable $26-37/mt premiums over HSFO in Rotterdam – depending on whether estimated EU Allowance (EUA) costs are included for voyages between two EU ports, between an EU and non-EU port, or not included at all. This is up from $17-27/mt discounts last week.

VLSFO

Rotterdam and Singapore’s VLSFO prices have tracked the fall in front-month ICE Brent futures in the past week.

Rotterdam’s VLSFO benchmark has slumped by a massive $41/mt without EUA costs added. When we add estimated EUA costs, VLSFO is down by $33-37/mt – depending on whether we are looking at voyages between two EU ports, or between EU and non-EU ports.

Securing prompt deliveries for the grade may be difficult in Rotterdam, with suppliers only able to offer non-prompt delivery dates, a source said. Lead times of 4-5 days are advised for VLSFO in Rotterdam, according to a trader.

Singapore’s VLSFO benchmark has tumbled $28-32/mt lower, depending on whether the price is adjusted with estimated EUA costs.

VLSFO availability has appeared more constrained in Singapore in the past week, despite average demand. Several suppliers are now suggesting lead times of 7-13 days, slightly longer than the 6-10 days reported in the week prior.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has declined by $8-13/mt in the past week. This price is based on palm oil mill effluent methyl ester (POMEME) prices, which can qualify for advanced biofuel rebates through the Dutch HBE system.

In Rotterdam, around 263,000 mt of bio-bunkers were sold in the first quarter of 2024, an increase of 13% from the 233,000 mt sold in the previous quarter. Bio-bunker sales were at their highest since the fourth quarter of 2022.

Singapore’s B24-VLSFO UCOME bunker price plunged by $21-24/mt in the past week.

The price has declined despite a $5/mt increase in UCOME FOB China. The price gain for UCOME FOB China has been supported by strengthening downstream waste oil prices, according to PRIMA Markets.

LNG     

Rotterdam’s LNG bunker benchmark has moved against oil and biofuel prices and jumped $22-28/mt higher in the past week, depending on whether estimated EU ETS costs are included in the cost of fuel. The underlying Dutch TTF Natural Gas contract rolled from the May contract to the higher-priced June contract last week, which has raised the TTF benchmark slightly.

Rising gas prices can partly be attributed to a decline in Norwegian gas flows to Europe, combined with higher heating demand during the second half of April in Europe, according to ING’s Warren Patterson.

Singapore’s LNG bunker price has remained stable in the past week, recording only a modest $6-9/mt gain. This LNG bunker price is influenced by the Japan/Korea Marker (JKM) price and prevailing trends in the Asian LNG market.

The JKM price has come up slightly amid rising spot LNG prices in Asia, which have been driven higher by concerns over Russian gas supply to Europe.

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Source: Engine Online