Fuel Switch Snapshot: Biofuel-LNG price gap widens

Conventional fuel prices rise with Brent

Bio blends cost over $200/mt more than LNG

Bio demand sluggish in Singapore and Rotterdam

CHART: The dots represent bunker fuel prices adjusted for calorific contents to become VLSFO-equivalents, and with various estimated levels of EU ETS costs in 2024 excluded (Rotterdam) and included (Rotterdam to non-EU port and Rotterdam to EU port). ENGINE, PRIMA Markets, NYMEX

Rotterdam's VLSFO premium over LNG has surged by $29/mt in the past week, to $35/mt. This gap has widened as VLSFO has gained while LNG has declined. When we add the estimated EU Allowance (EUA) costs, LNG is now $41-47/mt cheaper than VLSFO in Rotterdam.

Bio premiums have shot up in both Rotterdam and Singapore for yet another week.

Bunkering a B24-VLSFO blend in Rotterdam will now be $179/mt costlier than bunkering VLSFO, and $214/mt more than LNG.

HSFO remains the most affordable option for scrubber-fitted ships, even with estimated EUA costs factored into the price of bunker fuel.

VLSFO

A $1.54/bbl ($11/mt) increase in front-month ICE Brent futures has pushed up Rotterdam and Singapore's VLSFO prices. When we include estimated EUA costs, VLSFO has increased by $17-20/mt in Rotterdam and $15/mt in Singapore.

VLSFO availability in Rotterdam remains normal, with lead times roughly unchanged over the last few weeks at 3-5 days.  

Availability in Singapore has tightened again after a slight improvement in the previous week. Most suppliers now recommend lead times of up to 14 days, though some can supply stems within four days.

Biofuels

Sharp price increases for both pure VLSFO and palm oil mill effluent methyl ester (POMEME) components have driven up the price of Rotterdam’s B24-VLSFO HBE biofuel blend price over the past week.

The PRIMA-assessed POMEME price in the ARA region surged by $40/mt in the past week, to $1,448/mt.

Bio-bunker demand remains sluggish in Rotterdam and the wider ARA hub, according to two sources. Availability has been good, with prompt deliveries also possible, a trader said.

Singapore's B24-VLSFO UCOME price has increased by $10/mt in the past week, or $12/mt when factoring in estimated EUA costs.

Spot bio-bunker demand remains low in Singapore, with most deliveries booked for term supply contracts, two sources say. These term contracts are mostly for container lines.

LNG

Prices for VLSFO-equivalent LNG bunker fuel have dropped in both Rotterdam and Singapore in the past week.

Rotterdam’s LNG bunker price has decreased by $14/mt. The main reason for this is high inventory levels and steady supplies from Norway, which continue to weigh down on prices.

Singapore's price has made a smaller $7/mt drop, primarily influenced by a decline in the JKM (Japan/Korea Marker) gas benchmark. This decrease comes amid weak demand in the Asian LNG market, according to Rystad Energy.

By Konica Bhatt

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