Fuel Switch Snapshot: LNG at rare premium over B24-VLSFO in Rotterdam

LNG overtakes B24-VLSFO HBE in Rotterdam 

Rotterdam's LNG only $4/mt cheaper than B24-LSMGO HBE

Dutch rebates for B30-VLSFO surpass $200/mt

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

Few shipowners might have a direct choice between LNG and bio-blends, as these fuels typically cater to different vessel types and operational needs. But for dual-fuel shipowners in Rotterdam choosing between the two, it is now costlier to bunker LNG than B24-VLSFO, which contains 24% palm oil mill effluent methyl ester (POMEME)-based biofuel and 76% VLSFO.

B24 is a much less common blending ratio than B30 is in Rotterdam. But in this article series we use B24 for both Rotterdam and Singapore to be able to compare them like-for-like.

Rotterdam’s LNG has shifted from a $15/mt discount to a striking $80/mt premium over its B24-VLSFO HBE – excluding estimated EU Allowance (EUA) costs. This is following a steep $46/mt drop in the B24-VLSFO price and a $49/mt spike in the LNG price.

When factoring in EUAs, LNG’s premium rises further to $86–91/mt.

This is the first time that LNG has been priced above B24-VLSFO in Rotterdam since the Fuel Switch Snapshot reporting began on 12 March. Back then, LNG was the port’s most affordable of all fuels - including HSFO.

LNG now costs just $4/mt less than B24-LSMGO HBE in Rotterdam, a sharp narrowing from a substantial $102/mt discount seen the previous week.

Singapore LNG’s price premium over B24-VLSFO UCOME has narrowed to $21/mt in the past week without EUAs included, and $16/mt with. That is less than half of last week’s $46–51/mt discount.

VLSFO

The front-month ICE Brent futures contract has dropped by $2.83/bbl ($21/mt) over the past week. Rotterdam’s VLSFO benchmark has fallen by $10/mt, while Singapore's VLSFO benchmark has made a steeper decline of $35/mt.

VLSFO availability in Rotterdam remains tight, with traders recommending lead times of 5–7 days. This has helped support the benchmark price.

In contrast, VLSFO availability in Singapore has improved further. Several suppliers can now offer deliveries in as little as two days, compared to four days a week earlier. This increased availability has added downward pressure on the benchmark price.

Biofuels

Rotterdam’s B24-VLSFO HBE price has plummeted by $46/mt in the past week, and its premium over conventional VLSFO has decreased by $36/mt to $108/mt now.

Bigger theoretical Dutch HBE rebates have exerted downward pressure on both biofuel benchmarks.

This could also spur more biofuel demand in the port. The Dutch HBE A ticket price for 2024 was assessed by PRIMA Market at €22.50/GJ ($23.73/GJ) on Friday, up from €14.90/GJ ($15.71/GJ) a week earlier. This sharp increase boosts the theoretical rebate for B30-VLSFO HBE blends sold in the Dutch ports to $210/mt, compared to $142/mt a week ago.

Singapore’s B24-VLSFO UCOME price has dropped by $20/mt in the past week. The bio-blend has drawn some support from a $25/mt rise in the underlying UCOME FOB China price assessed by PRIMA. But the ENGINE VLSFO price, which has more impact towards the calculated B24-VLSFO UCOME price, has gone down by $35/mt.

LNG

Rotterdam’s LNG bunker price has surged by $36/mt over the past week, reflecting an increase in the broader Dutch TTF Natural Gas contract. The rise is attributed to renewed concerns over potential disruptions to Russian gas pipeline flows into Europe.

Singapore’s LNG price has recorded a more modest $9/mt increase, driven by tighter supply and weather-related demand fluctuations across Asia.

As a result, Singapore’s LNG premium over Rotterdam has narrowed sharply to just $3/mt, down from $35/mt the previous week.

By Konica Bhatt

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