- Over Week 22, the global bunker indices tracked by MABUX exhibited a sideways trend, lacking a definitive direction.
- The 380 HSFO index saw an increase of 7.38 USD, rising from 543.89 USD/MT last week to 551.27 USD/MT. Conversely, the VLSFO index dropped by 3.63 USD, settling at 649.26 USD/MT compared to 652.89 USD/MT the previous week.
- The MGO index experienced a marginal decline of 0.35 USD, from 839.56 USD/MT to 839.21 USD/MT. A moderate upward trend is currently observed in the global bunker market.
The MABUX Global Scrubber Spread (SS) – the price difference between 380 HSFO and VLSFO – consistently declined, falling by 11.01 USD to 110.14 USD, compared to 112.56 USD last week. This is the first dip below the 100.00 USD SS breakeven point since October 10, 2023. The weekly average also decreased by 9.21 USD.
In Rotterdam, the SS Spread dropped by 11.00 USD, from 90.00 USD to 79.00 USD, while the port’s weekly average decreased by 3.33 USD. Singapore saw the most significant reduction, with a 20.00 USD decrease to 64.00 USD, down from 84.00 USD the previous week, and a weekly average drop of 23.00 USD. The downward trend in SS Spread suggests a challenging environment for scrubber profitability, potentially extending the payback period and increasing demand for conventional and alternative bunker fuels. We expect the SS Spread to continue narrowing in the short term.
Natural Gas and LNG Trends
European benchmark natural gas prices rose due to supply concerns and forecasted lower wind power generation. Factors contributing to this include unplanned outages in Norway, planned maintenance at some gas assets, increased demand in Asia, and the end of the current gas transit deal for Russian pipeline gas via Ukraine by the end of 2024. During Week 22, the European gas benchmark TTF grew by 0.530 EUR/MWh, from 33.004 EUR/MWh to 33.534 EUR/MWh, despite a decline over the last three trading days.
The price of LNG as bunker fuel in Sines, Portugal, continued to rise, reaching 768 USD/MT on May 27, a 40 USD increase from the previous week. However, the price difference between LNG and conventional fuel decreased to 40 USD in favor of LNG, compared to 89 USD the previous week, with MGO LS quoted at 808 USD/MT in Sines on the same day.
MDI Index Trends
The MDI index, which measures the correlation between market bunker prices (MABUX MBP Index) and the MABUX digital bunker benchmark (MABUX DBP Index), showed the following trends in major world hubs: Rotterdam, Singapore, Fujairah, and Houston.
- 380 HSFO Segment: All selected ports remained undervalued, with weekly averages increasing by 6 points in Rotterdam, 15 points in Singapore, 18 points in Fujairah, and 6 points in Houston.
- VLSFO Segment: All ports were undervalued. Weekly averages increased by 4 points in Singapore and 3 points in Houston, but decreased by 2 points in Rotterdam and 1 point in Fujairah. The MDI index in Fujairah remained close to 100% correlation.
- MGO LS Segment: Houston remained the only overvalued port, with its weekly average rising 7 points and consistently staying above the 100% correlation mark. Other ports were undervalued, with weekly averages showing a 3-point decline in Rotterdam, a 1-point decline in Singapore, and a 13-point increase in Fujairah.
By the end of the week, there were no significant changes in the balance of overvalued and undervalued ports or the trend towards undervaluation of bunker fuel across all market segments.
Industry Outlook
According to DNV, the gap between LNG-fueled tonnage and the necessary infrastructure for fueling them is widening. Despite this, industry stakeholders are awaiting market assurances before investing in LNG bunker vessels. A clear shortage of these vessels is expected to become apparent within the next 12 months. DNV estimates that 2.3 million tonnes of LNG were bunkered in 2023, accounting for 1% of the global marine fuels market. This market is growing rapidly, with LNG consumption projected to increase by 400%, reaching 11 million tonnes by 2026.
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