Fuel Switch Snapshot: HSFO becomes cheapest fuel in Rotterdam

Rotterdam's LNG price spikes as supply risks return   

Bio premiums fall in 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 excluded (Rotterdam) and included (Rotterdam to non-EU port and Rotterdam to EU port). ENGINE, PRIMA Markets, NYMEX

Rotterdam’s LNG price has shot up in the past week and moved to near parity with HSFO. As you can see in the chart above, the first pink dot (LNG excluding EU ETS) has moved slightly to right of the first purple dot (HSFO excluding EU ETS). This means that scrubber-fitted ships can enjoy HSFO as the cheapest fuel in the port.

For a ship sailing from Rotterdam to another EU port with estimated EU ETS costs included, LNG retains a $9/mt price advantage.  

LNG’s discount to B24-VLSFO in Rotterdam has narrowed by a massive $66-68/mt in the past week, depending on whether estimated EU ETS costs are included, but the price advantage is still hugely in favour of LNG at $228-239/mt.

Rotterdam’s LNG price discount to pure fossil VLSFO has also narrowed by a considerable $52-54/mt to $116-128/mt, while Singapore’s has widened by $7-8/mt to $120-126/mt.

Rotterdam’s B24-VLSFO premium over pure VLSFO has gone down by $13-16/mt to $100-123/mt.

VLSFO

Rotterdam’s VLSFO benchmark has fallen by $11/mt lower in the past week, to $611/mt. But when the price of Dec24 EU Allowances (EUAs) for voyages between two EU ports is added to the VLSFO price, it has gone up by $2/mt on the week.

Availability of fuel grade remains normal in Rotterdam and traders recommend lead times of 4-5 days.

Singapore’s VLSFO benchmark has declined by $10/mt in the past week, and by a smaller $3/mt when it is adjusted with the estimated EUA price for a voyage to an EU port. ENGINE has recorded 12 lower-priced VLSFO stems in Singapore in the past week. Stems were priced between $643-654/mt. Two stems were for deliveries within seven days and the rest were for non-prompt deliveries beyond seven days.

Prompt availability of VLSFO has improved in Singapore in the past week. Most suppliers are recommending lead times of around 4-8 days – down significantly from up to 14 days last week.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has moved $14-24/mt lower in the past week, to $734/mt.

A palm oil mill effluent methyl ester (POMEME) cargo was priced at $1,352/mt in the ARA region on Friday, PRIMA Markets said. This was a sharp decline of $53/mt over the past week. POMEME-based biofuels are eligible for Dutch advanced biofuel rebates.

Singapore’s B24-VLSFO UCOME bunker price has inched $3-8/mt lower to $763-800/mt, depending on whether the fuel is estimated to be consumed on a voyage to an EU port or not.

There were some signs that Chinese UCO prices were starting to decrease slightly as feedstock offers came down in the middle of the week, according to PRIMA Markets. Sellers of Chinese UCO feedstock have been feeling “increasingly pressured” as buyers have gained more control in the current market situation, market sources informed PRIMA.

Singapore imports most of its UCO from China and a decrease in Chinese UCO prices is likely to be reflected in Singapore's biofuel bunker prices.

LNG

Rotterdam’s LNG bunker benchmark has surged by $43-54/mt in the past week. The price increase has come amid a $38/mt spike in the front-month NYMEX Dutch TTF Natural Gas benchmark, and as LNG bunker delivery costs are estimated to have gone up by $13/mt on the week to $117/mt.

Russian attacks on two Ukrainian underground gas storage facilities have "renewed" fears about tightening supplies in the European natural gas market, ING's Warren Patterson argued. He also said that ongoing maintenance at the Freeport LNG export terminal in the US will hamper supply to Europe through May.

Singapore’s LNG bunker benchmark has fallen by $12-17/mt despite a $5/mt uptick in the underlying JKM gas benchmark. This is because the LNG bunker delivery cost was estimated to have come off by $26/mt to $130/mt.

By Konica Bhatt and Erik Hoffmann

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