Surge in VLSFO And Biofuel Prices: LNG Remains Cost-Effective

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  • VLSFO prices are up, driven by higher Brent crude prices and geopolitical tensions.
  • Biofuel blends have also seen price hikes, influenced by rising costs of components and regional market dynamics.
  • LNG prices in Rotterdam have remained stable, while Singapore has seen an increase due to higher demand in Asia.

Despite these trends, HSFO remains the most cost-effective option for scrubber-fitted ships, and fossil LNG continues to be a cheaper alternative to bio-blended VLSFO, especially when considering EU ETS costs, reports Engine.

VLSFO Prices Surge

  • Rotterdam and Singapore: VLSFO benchmarks have increased by $19/mt in Rotterdam and $16/mt in Singapore over the past week.
  • Impact of Brent Crude: The rise in front-month ICE Brent futures, driven by Middle Eastern geopolitical tensions, has supported this upward trend.
  • Price Comparisons:
    • Rotterdam’s VLSFO shifted from a $13/mt discount to LNG to a $6/mt premium.
    • Including estimated EU Allowance (EUA) costs for intra-EU voyages, LNG is now $12/mt cheaper than VLSFO in Rotterdam.
    • Bio-blended B24-VLSFO has become $21/mt more expensive relative to LNG, now standing at a $180/mt premium.

Biofuels Market Dynamics

  • Price Increases: Biofuel bunker blend prices in Rotterdam and other ARA ports rose by $20-21/mt, influenced by rising costs for both conventional and bio components.
  • Regional Variations:
    • UCOME-based B24-VLSFO in Gibraltar and Algeciras increased by $19/mt, widening its premium over Singapore’s equivalent to $67/mt.
    • Singapore’s B24-VLSFO gained $13/mt but remains less competitive compared to ARA prices.
  • Market Transactions: A B24-VLSFO deal in Singapore was reported at $729/mt, lower than another market indication of $745/mt.

LNG Pricing and Market Stability

  • Rotterdam: The VLSFO-equivalent LNG bunker price held steady at $568/mt, reflecting a slight drop in the Dutch TTF Natural Gas benchmark.
  • Singapore: LNG bunker prices rose by $7/mt, driven by increased demand in key Asian markets, potentially tightening supply and pushing prices upward.

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Source: Engine