During Week 44, the MABUX global bunker indices exhibited erratic fluctuations with no clear sustained trends. The 380 HSFO index declined by $27.94, dropping from $562.50 USD/MT the previous week to $534.56 USD/MT.
The VLSFO index increased by $1.06, reaching $672.58 USD/MT compared to $671.52 USD/MT the previous week. The MGO index saw a significant decrease of $29.73, going from $986.93 USD/MT last week to $957.20 USD/MT. At the time of writing, market trends remain uncertain.
Global Scrubber Spread
The price difference between 380 HSFO and VLSFO – showed a significant increase: plus $29.00 ($138.02 vs. $109.02 last week), still consistently above the $100.00 mark (the SS breakeven point). At the same time, the weekly average also increased by $11.01. In Rotterdam, on the contrary, the SS Spread decreased by $7.00 (from $90.00 last week to $83.00), but the average value saw a slight increase of $1.16.
Thus, the SS Spread in Rotterdam is stably below the $100.00 mark, due to relatively high prices for 380 HSFO, combined with limited availability resulting from shipping delays and congestion at oil terminals in the ARA region.
In Singapore, the price difference between 380 HSFO and VLSFO increased by $18.00, surpassing the $200.00 mark ($205.00 versus $187.00 last week). The weekly average also increased by $10.34. We expect SS Spread will continue to rise moderately in the upcoming week.
LNG Imports Surge
LNG imports in northwest Europe are set to surge by 30% in November, driven by rising heating season demand. The region will receive about 243 million cubic meters per day, a 15% decrease from November 2022.
Weather conditions will be a crucial factor in European gas consumption during the winter, while energy conservation efforts and high prices have reduced demand over the past year. The cost of LNG bunker fuel in Sines, Portugal, rose significantly, shifting the price balance in favor of MGO over LNG.
The MDI index
During Week 44, the MDI index (the ratio of market bunker prices (MABUX MBP Index) vs. the MABUX digital bunker benchmark (MABUX DBP Index)) revealed the following trends in four selected ports: Rotterdam, Singapore, Fujairah and Houston:
HSFO segment
In the 380 HSFO segment, all four ports remained undervalued. The average weekly underpricing increased by 4 points in Rotterdam, 8 points in Singapore, 5 points in Fujairah and 9 points in Houston. In Fujairah, the underpricing level of this fuel type still exceeded the $100 mark.
VLSFO segment
In the VLSFO segment, according to MDI, Singapore remained the only overvalued port. The average overpricing increased by 6 points during the week. In the other three ports, VLSFO was underestimated. Undercharge weekly average increased by 1 point in Rotterdam but decreased by 10 points in Fujairah and 3 points in Houston. Fujairah was close to the 100% correlation between market prices and the digital benchmark.
MGO LS segment
In the MGO LS segment, all ports showed undervaluation, with the weekly average decreasing in Rotterdam by 4 points, in Fujairah by 11 points and in Houston by 4 points. In Singapore, the average MDI index increased by 3 points.
Energy Outlook
Global energy and fossil fuel consumption are predicted to reach record highs in 2024, driven by robust demand in Asia. Fossil fuel demand will rise, with a 1.7% increase in oil demand and a 2.2% growth in natural gas demand, mainly led by Asia and the Middle East.
Meanwhile, Europe is conserving energy, and renewable energy capacity additions are expected to reach historical highs. The Middle East conflict adds volatility to the global bunker market, causing irregular fluctuations in bunker indices.
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Source: LinkedIn-MABUX
