- The global bunker market ended 2024 with stable price trends after earlier fluctuations.
- The Scrubber Spread fell below profitability levels, yet scrubber adoption grew.
- LNG remained the preferred alternative fuel due to growing demand and infrastructure.
The global bunker market ended 2024 relatively stable after experiencing strong multidirectional fluctuations in the first half of the year. Prices for 380 HSFO and VLSFO rose moderately, while MGO LS quotes fell slightly. However, from September onwards, fluctuations decreased, and price trends for all three fuel types stabilized at their respective levels. By the end of the year, the 380 HSFO Index recorded a paltry gain of USD 1.96, the VLSFO Index shed USD 54.00, and the MGO LS Index shed USD 125.66, reports LinkedIn.
Regional Price Movements
Regionally, the 380 HSFO segment was mixed in 2024. Prices in Central and South America rose by 15.9% and 5.7%, respectively, while other regions saw moderate declines of between 2% and 8%. VLSFO saw prices decline across all regions, with declines of between 6% and 14%. MGO LS also saw a sharp decline in prices, at between 17% and 26%. The biggest fall was in Asia and Oceania for 380 HSFO with a decrease of 8.1%. For VLSFO and MGO LS, Africa and the Middle East were where the greatest decreases were recorded: 14.4% and 26.8%, respectively.
Scrubber Spread Dynamics
The MABUX Global Scrubber Spread (Global SS), a measure of the difference between the prices of 380 HSFO and VLSFO, stayed in positive territory through the first half of 2024 at over $100.00 for the 380 HSFO + Scrubber combination, which kept that fuel combination profitable. However, during June, Global SS approached its breakeven point and drifted between that mark and the mid-October position. It was last seen in the final quarter to drop below $100.00, then range-bound between $73.00 and $76.00 for the rest of the year. Scrubber Spread in the 380 HSFO + Scrubber fell due to falling economic efficiency.
SS Spread
In Rotterdam, it also started falling below $100.00 in May. It bottomed at a record low of $14.00 in October, then corrected back to around $60.00 by the end of the year. In Singapore, the SS Spread remained at or above $100.00 until November but fell below the breakeven level in December, trading between $85.00 and $95.00. Although profitability was lower, the number of ships fitted with scrubbers increased, with the total number of ships fitted with scrubbers reaching 5,790 in 2024, up from 5,375 in 2023.
MDI Analysis
The MABUX Market Differential Index (MDI) reflects the bunker price differential in Rotterdam and Singapore as compared to the MABUX digital bunker price benchmark. MDI was largely negative for all fuel types for 2024.
In Rotterdam, 380 HSFO remained undervalued throughout the period except for a short period of overvaluation in October and November. VLSFO and MGO LS remained undervalued, though the latter recorded more significant underpricing levels. In Singapore, 380 HSFO and MGO LS were undervalued, whereas VLSFO was alternately moderately overvalued and undervalued throughout the year. Undervaluation is expected to continue in the near term for all types of bunker fuels.
LNG as Alternative Bunker Fuel
TTF, among other global gas indices, remained steadily on the rise in 2024. These were the driving factors behind the increase in the price of LNG as a bunker fuel. During the first half of the year, LNG prices were cheaper than MGO LS in key ports such as Sines (Portugal) and ARA. However, by August, the cost ratio had shifted in favour of MGO LS with the price gap currently standing between 200 and 250 USD/MT in Sines and between 140 and 230 USD/MT in ARA. Despite the widening price gap, LNG is the preferred alternative bunker fuel, considering the high demand in the container ship segment, a well-established LNG bunkering infrastructure, and the steady increase in LNG-powered vessels. In 2024, LNG-powered vessels had increased to 723 units, from 472 in 2023.
Global Bunker Market Outlook for the Future
The global bunker market continues on a steady keel due to balancing supply and demand. However geo-political issues may induce momentary spikes. The Mediterranean bunker market, particularly, will drift towards environment-friendly fuels in the wake of declaring MedECA on May 1, 2025. None of the abovementioned would bring major structural changes to the global bunker market in 2025.
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Source: LinkedIn
