Weekly Report: Bunker Market and Fuel Trends

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Global Bunker Indices

During Week 25, the MABUX global bunker indices experienced a continued upward trend:

  • 380 HSFO Index: Increased by 5.90 USD, rising from 544.76 USD/MT to 550.15 USD/MT.
  • VLSFO Index: Climbed by 3.62 USD, moving from 635.05 USD/MT to 638.67 USD/MT.
  • MGO Index: Showed the most significant growth, adding 12.79 USD to reach 838.55 USD/MT, up from 825.76 USD/MT the previous week.

The global bunker market maintains a moderate upward trend as of the current update.

Scrubber Spread (SS)

The MABUX Global Scrubber Spread (SS), the price difference between 380 HSFO and VLSFO, slightly decreased by 1.77 USD (88.52 USD compared to 90.29 USD last week). Despite this dip, the spread remains below the 100.00 USD mark (SS Breakeven). Conversely, the average weekly value increased by 2.05 USD.

  • Rotterdam: SS Spread increased for the first time in three weeks, adding 4.00 USD (from 60.00 USD to 64.00 USD). However, the average weekly value decreased by 5.17 USD.
  • Singapore: The price difference between 380 HSFO/VLSFO continued to widen, increasing by 11.00 USD (from 75.00 USD to 86.00 USD), approaching the 100.00 USD threshold. The weekly average at the port added 7.83 USD.

Overall, the SS Spread has stabilized at these levels and hints at an upward correction. An upward trend is anticipated next week. More information is available in the “Differentials” section of mabux.com.

European Gas Storage and Prices

As of June 11, the EU’s gas storage sites were 72.3% full. The refilling season has commenced, raising gas storage levels from 58% at the end of winter—a record high for that period due to a milder winter and reduced industrial demand. Despite this, the pace of gas inventory build-up has been slower than usual, contributing to rising European gas prices. This price increase reflects recent supply risks from Norway and Russia. Additionally, competition for LNG supply has intensified in Asia due to severe heat waves in South and Southeast Asia, leading to a diversion of cargo away from Europe.

  • European Gas Benchmark (TTF): Showed a slight increase, adding 0.415 EUR/MWh (34.700 EUR/MWh compared to 34.285 EUR/MWh last week).

LNG as Bunker Fuel

The price of LNG as bunker fuel in the port of Sines (Portugal) began to rise again, reaching 834 USD/MT on June 17 (an increase of 41 USD compared to the previous week). The price difference between LNG and conventional fuel on June 17 showed a 20 USD advantage for MGO LS, contrasting with a 4 USD advantage for LNG the week before. On that day, MGO LS was quoted in the port of Sines at 814 USD/MT. More information is available in the LNG Bunkering section of mabux.com.

Market Digital Index (MDI)

In Week 25, the MDI index (the correlation ratio of market bunker prices (MABUX MBP Index) vs. MABUX digital bunker benchmark (MABUX DBP Index)) indicated underpricing of all fuel segments in the four largest hubs: Rotterdam, Singapore, Fujairah, and Houston.

  • 380 HSFO Segment: Weekly underprice averages rose by 4 points in Rotterdam, 12 points in Singapore, 18 points in Fujairah, and 11 points in Houston.
  • VLSFO Segment: Average weekly undervaluation levels increased by 18 points in Rotterdam, 8 points in Singapore, 12 points in Fujairah, and 13 points in Houston.
  • MGO LS Segment: Weekly averages grew by 16 points in Rotterdam, 13 points in Singapore, 26 points in Fujairah, and 10 points in Houston. The MDI index in Singapore exceeded the 100 USD mark once again.

By the end of the week, the pattern of undervaluation in all selected ports remained unchanged. The trend of fuel underpricing is expected to persist into the next week. For more details on the correlation between market prices and the MABUX digital benchmark, visit the “Digital Bunker Prices” section on mabux.com.

Shift in Shipping Routes

Since October 2023, Integr8 Fuels has reported a significant shift in shipping routes, with many vessels now opting to navigate around Africa instead of using the Red Sea. This change has resulted in a notable increase in the demand for HSFO (High Sulphur Fuel Oil). Concurrently, ports along the African coast and nearby Spain have experienced a 30% rise in VLSFO (Very Low Sulphur Fuel Oil) sulphur off-specification incidents. The primary cause has been traced to contamination from barges also transporting HSFO.

  • VLSFO Sulphur Levels: Blending practices aim for a 0.50% sulphur limit, but deviations can affect shipowners’ profit margins. Over the past six months, there has been an observed increase in average sulphur content in VLSFOs in both the ARA (Amsterdam-Rotterdam-Antwerp) and Singapore regions. In Singapore, the likelihood of encountering VLSFO with a sulphur content of 0.51-0.53% has more than doubled in the past six months. Despite this, only 0.3% of VLSFOs in Singapore exceed the sulphur specification, whereas 2% of VLSFOs in the ARA region test off-spec for sulphur.

The global bunker market is expected to continue its steady upward movement next week.

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Source: LinkedIn