Weekly Bunker Market and Alternative Fuels Update

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During Week 28, the MABUX global bunker indices experienced a moderate downward trend. The 380 HSFO Index decreased by 2.73 USD, moving from 560.59 USD/MT to 557.86 USD/MT, staying within the 550-560 USD range. The VLSFO index also saw a decline of 2.29 USD, from 663.08 USD/MT to 660.79 USD/MT. Additionally, the MGO index dropped by 9.87 USD, from 862.55 USD/MT to 852.68 USD/MT. As of this writing, the global bunker market continues to exhibit a slight downward trajectory.

Scrubber Spread and Regional Variations

The MABUX Global Scrubber Spread (SS), representing the price difference between 380 HSFO and VLSFO, showed a marginal increase of $0.44, reaching $102.93 from $102.49 the previous week, hovering around the $100.00 breakeven mark. The weekly average increased by $3.76. In Rotterdam, SS Spread values fell by $5.00 to $63.00, with the weekly average symbolically decreasing by $0.84. Conversely, in Singapore, the 380 HSFO/VLSFO price difference dropped significantly by $15.00, hitting $100.00 from $115.00, despite the weekly average rising by $1.00. The SS Spread currently lacks a stable trend, and fluctuations are expected to continue in the coming week.

European Gas and LNG Bunker Fuel Prices

European gas demand continued to decline in the first half of 2024 due to reduced gas-fired generation and lower gas usage in buildings. During Week 28, the European gas benchmark TTF decreased moderately by 2.350 EUR/MWh, from 33.685 EUR/MWh to 31.335 EUR/MWh. Meanwhile, the price of LNG as bunker fuel in the port of Sines, Portugal, significantly dropped to 743 USD/MT on July 10, a decrease of 50 USD compared to the previous week. The price difference between LNG and conventional fuel widened sharply to 113 USD in favor of LNG, compared to 47 USD the week before, with MGO LS quoted at 856 USD/MT in Sines.

Market Digital Indicator (MDI) and Underpriced Fuel Segments

In Week 28, the MDI index (the correlation ratio of market bunker prices (MABUX MBP Index) versus MABUX digital bunker benchmark (MABUX DBP Index)) indicated undervaluation across all fuel segments in the major hubs: Rotterdam, Singapore, Fujairah, and Houston. For the 380 HSFO segment, the weekly underprice averages decreased by 6 points in Rotterdam and 5 points in Houston but increased by 1 point in Singapore and 7 points in Fujairah. In the VLSFO segment, the average weekly undervaluation levels fell by 5 points in Rotterdam and 2 points in Fujairah but rose by 1 point in Singapore and 4 points in Houston. In the MGO LS segment, Houston entered the undervalued zone, joining the other three ports. The weekly underprice average increased by 4 points in Rotterdam, 8 points in Singapore, 10 points in Fujairah, and 4 points in Houston, with Rotterdam surpassing the $100 mark and Singapore consistently above this level.

Trends in Alternative-Fuelled Ships

According to Clarksons Research, a third of the ships ordered in the first half of the year were alternatively fuelled, making up 41% of tonnage orders. The orders included 109 for LNG-fuelled ships (excluding LNG carriers), 49 for methanol, 15 for ammonia, 42 for LPG, and four for hydrogen. Comparatively, 54% of tonnage orders were alternatively fuelled in the same period of 2022. Currently, about 50% of the total orderbook can operate on alternative fuels, and it is forecasted that over a fifth of all fleet capacity will be capable of using alternative fuels by the decade’s end. However, investments in port infrastructure and the availability of “green” fuels lag behind. Currently, 273 ports have LNG bunkering and 251 ports have shore power connections either in place or planned, whereas only 29 ports have methanol bunkering available or planned. Additionally, 28.3% of the global fleet’s total tonnage, or 5,838 ships, are now equipped with scrubbers, and 33.5% of global tonnage, or 8,713 ships, have energy-saving technologies on board.

Outlook for Next Week

We expect the downward trend in the global bunker market to lose momentum, with bunker indices likely returning to moderate growth next week.

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Source: LinkedIn