VLSFO Becomes Cheaper Than LNG In Rotterdam And Singapore

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  • VLSFO is cheaper than LNG in Rotterdam and Singapore
  • Singapore’s biofuel discount to Rotterdam widens
  • Biofuel-LNG price gap narrows even more

VLSFO is now the second-cheapest fuel after HSFO in two of the world’s biggest bunker ports, even when the additional EU Allowances (EUAs) are included in bunker fuel costs.

Price Adjustment 

After adjusting the price for calorific contents to become VLSFO-equivalent, Rotterdam’s LNG price has flipped to a premium of $7-20/mt over its VLSFO in the past week, from a $20-33/mt discount noted a week prior.

Singapore’s LNG is now $33-40/mt more costly than its VLSFO, slightly higher than the $29-36/mt premium seen a week prior.

Biofuel price premium in Rotterdam over fossil LNG has dropped by $25/mt in the past week. Singapore’s bio-bunker premium over LNG has inched lower by a modest $3/mt to $72-78/mt.

VLSFO

Rotterdam and Singapore’s VLSFO benchmarks have mostly tracked Brent’s downward movement in the past week.

Rotterdam’s VLSFO price remained stable in the past week, with a $2-4/mt decline depending on whether the estimated EUA costs are included. Availability of the grade remains normal in the port, and traders still recommend lead times of 3-5 days.

Singapore’s VLSFO benchmark noted a slight decline of $5-6/mt over the past week. Most suppliers recommend lead times of up to nine days for this grade, while some can accommodate stems in as little as two days in port.

Biofuels

Rotterdam’s B24-VLSFO HBE price has gained by $10-12/mt in the past week, depending on whether we include estimated EUA costs for voyages between EU ports.

A steep gain in the price of palm oil mill effluent methyl ester (POMEME) has supported the gains in both benchmarks. Biofuels based on POMEME feedstock can qualify for advanced biofuel rebates through the Dutch HBE system.

Overall, bio bunker demand was mostly slow in the ARA hub last week, a source says.

Singapore’s B24-VLSFO price has come down by $4-5/mt in the past week, which includes the estimated EUA costs. The bio-bunker prices have come down amid a $5/mt drop in UCOME FOB China, according to PRIMA Markets.

Lead times for bio-bunker grades vary between 10-14 days in Singapore. Most suppliers there typically use the same barges for B24-VLSFO deliveries as for pure VLSFO, because of this, they require additional time to plan delivery schedules, a source says.

LNG 

Rotterdam’s LNG bunker price has climbed upwards by $36-37/mt in the past week, depending on whether estimated EU ETS costs are included in the cost of fuel.

The front-month Dutch TTF contract has climbed to its highest level this year due to an unplanned outage at Norway’s Nyhamna gas plant, according to an Energi Danmark Securities report. The Nyhamna plant, operated by the state-owned firm Gassco, is one of the largest gas processing plants in Norway.

Austrian gas supplier OMV warned of potential disruptions in gas supplies from Russia’s Gazprom due to a court ruling. This has added to the upward pressure to the European LNG benchmark.

Singapore’s LNG bunker price, on the other hand, has remained relatively steady in the past week, with only a $1-2/mt drop.

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Source: Engine