- Notable decreases in 380 HSFO, VLSFO, and MGO prices.
- The price gap between 380 HSFO and VLSFO continues to diminish, impacting scrubber viability.
- Despite rising natural gas prices, European storage facilities remain well-stocked.
- Significant increase in LNG bunker fuel prices in Sines, Portugal, widening the price gap with conventional fuels.
- Container throughput rises while liquid bulk shows a decline.
In Week 44, MABUX global bunker indices recorded a general downward trend across major fuel types, as reported by LinkedIn India. The 380 HSFO index fell by $10.90 to $528.49/MT, the VLSFO index dropped by $18.90, crossing below the $600.00 mark to $596.21/MT, and the MGO index declined by $20.55 to $749.50/MT. At the time of reporting, however, a moderate upward correction was observed in global bunker indices, suggesting potential price adjustments in the upcoming week.
Narrowing Global Scrubber Spread
The Global Scrubber Spread (SS) – measuring the price differential between 380 HSFO and VLSFO – continued to narrow this week, dropping $8.00 to $67.72, staying below the breakeven mark of $100. This narrowing is impacting the economic feasibility of the 380 HSFO combined with scrubber use, with the spread between 380 HSFO and VLSFO expected to keep narrowing. Regionally, the SS Spread in Rotterdam saw a steep decrease of $26.00, marking its lowest level since IMO 2020 regulations, while in Singapore, the spread contracted by $6.00, breaking the $100.00 threshold.
Stability in European Gas Markets Amid Global Volatility
European natural gas prices showed a steady rise through the second and third quarters of 2024, though still below the levels seen in 2023. Contributing factors include higher Norwegian supply, well-stocked storage, and subdued demand across Europe, which offset pressures from a tighter LNG market globally. On October 28, European storage reached 95.32% capacity, exceeding the bloc’s early 90% target set for November 1. Consequently, the TTF gas benchmark rose by €2.165/MWh to €42.869/MWh by the end of the week.
LNG Bunker Fuel Prices Surge in Sines, Portugal
LNG bunker fuel prices in Sines, Portugal, saw a significant increase last week, spiking by $81 to $948/MT. This rise widened the price difference between LNG and conventional marine fuels, with MGO LS costing $719/MT, making LNG $229 more expensive. This disparity reflects an increased cost of LNG bunkering relative to traditional fuels, with further details available in MABUX’s LNG Bunkering section.
MDI Index Trends Across Major Hubs
The MDI index, representing the ratio of market bunker prices (MABUX MBP Index) versus MABUX digital bunker benchmark (DBP Index), indicated varied trends across major global hubs:
- In the 380 HSFO segment, Singapore and Houston moved into the overcharge zone, with Rotterdam’s weekly overprice average increasing by 17 points. Conversely, Fujairah remained the only undervalued port.
- The VLSFO segment saw continued overcharges in Singapore and Fujairah, while Rotterdam and Houston remained undervalued.
- All ports in the MGO LS segment stayed in the undercharge zone, with slight fluctuations in weekly averages across the four major ports.
The global bunker market has leaned towards undervaluation, and the undervalued trend for all bunker fuel types remains dominant.
Port of Rotterdam’s Q3 Performance
In the first three quarters of 2024, the Port of Rotterdam reported a throughput of 328.6 million tonnes, a slight 0.4% decrease year-over-year. Container throughput increased by 3% year-on-year due to higher consumer spending in Europe, though liquid bulk throughput decreased by 1.7%, mainly due to unexpected maintenance in German refineries and weak refinery margins. LNG throughput also dropped due to high European gas reserves, with LNG spot cargoes increasingly redirected to Asia, where prices remain higher. Biofuels throughput saw a notable reduction as well.
Outlook for Next Week
Following the recent decline in bunker prices, an upward correction is expected to dominate the global bunker market in the coming week.
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Source: LinkedIn India
