- Global bunker indices showed a moderate decline, with key fuel types seeing price reductions.
- The scrubber spread (SS) remained below the $100 breakeven mark, lacking a clear trend.
- European gas prices surged due to supply concerns, while LNG imports rose significantly.
- LNG bunker fuel prices increased, widening the spread with conventional fuel.
- Methanol-powered vessel orders hit a record high in October, while LNG continues to lead alternative-fuel orders.
Bunker Fuel Market Overview
In Week 46, the MABUX global bunker indices reflected a moderate downward shift. The 380 HSFO index dropped by $7.39, settling at $522.40/MT, while the VLSFO index decreased by $8.09 to $601.05/MT, nearing the $600 mark. The MGO index also declined, falling $13.63 to $759.55/MT. Despite the overall downward trend, a slight upward correction was observed by the week’s end.
Scrubber Spread Trends
The Global Scrubber Spread (SS), which measures the price difference between 380 HSFO and VLSFO, recorded a slight decrease of $0.70, ending the week at $78.65. While Rotterdam saw a significant increase in the SS spread, climbing by $14.00 to $44.00, Singapore experienced a $10.00 drop, bringing its spread down to $105.00. Weekly averages indicated mixed results, with no consistent trend expected in the short term.
European Gas Prices and LNG Imports
European gas prices surged due to heightened supply concerns, influenced by geopolitical tensions in the Middle East and unexpected outages in Norway. Additionally, the impending expiration of the Ukraine-Russia gas transit agreement further fueled uncertainties. These factors drove a rise in LNG imports, with October seeing a significant increase to 7.54 million metric tons, the highest since May. As of November 11, European gas storage facilities were 93.04% full, marking a slight week-on-week decrease.
LNG as Bunker Fuel
LNG bunker fuel prices at the port of Sines, Portugal, increased by $79, reaching $927/MT. The price difference between LNG and conventional fuel widened significantly, with MGO LS priced at $732/MT, creating a spread of $195.
MABUX Digital Index (MDI) Trends
The MDI index revealed mixed trends across major ports like Rotterdam, Singapore, Fujairah, and Houston:
- 380 HSFO: Singapore and Houston returned to the undercharge zone, with increased weekly averages. Rotterdam remained overcharged but saw a weekly average decrease.
- VLSFO: Singapore and Fujairah remained overcharged, while Rotterdam and Houston were undervalued.
- MGO LS: All selected ports were undervalued, with minor weekly average increases in Rotterdam, Singapore, and Fujairah.
Overall, the market balance shifted toward underpricing, a trend expected to persist into the next week.
Alternative-Fuel Vessel Orders
October marked a record month for methanol-powered vessel orders, with 29 orders, including 20 bulk carriers. Methanol continues to gain traction, but LNG remains the leader in alternative-fuel vessel orders. In the first 10 months of 2024, 464 alternative-fuel vessel orders were placed, a 46% year-on-year increase. LNG orders, particularly in the container segment, surged, with 177 new orders since July.
Outlook
The bunker fuel market showed no clear directional dynamics and moved sideways during Week 46. This trend is expected to continue into the following week as the market awaits more definitive factors to influence pricing. Alternative fuels like LNG and methanol are gaining momentum, underscoring the industry’s shift toward sustainability and diversification.
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Source: LinkedIn India
