Fuel Switch Snapshot: LNG regains edge but remains pricey

Tight VLSFO supply in Singapore drives up price

Rotterdam’s LSMGO is now cheaper than its LNG

LNG regains its cost advantage over B24-VLSFO

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-equivalent LNG bunker price has slightly corrected over the past week following its sharp rally in early August.

A sharp $27/mt decline in Rotterdam’s LSMGO price has shifted the benchmark to a $1/mt discount compared to the port’s LNG bunker price, down from a $15/mt premium in the past week.

Singapore’s LNG has regained its cost advantage over B24-VLSFO, but the gap remains narrow, with LNG just $30/mt more expensive than the bio-blend.

In Rotterdam, LNG’s discount to its B24-VLSFO (HBE) has widened by $9/mt over the past week, to $71/mt.

VLSFO

Rotterdam's VLSFO benchmark has mostly followed Brent’s downward trend over the past week.

Prompt availability of VLSFO is good in Rotterdam and the wider ARA hub, according to a trader. This has pulled the VLSFO benchmark slightly lower (-$11/mt) compared to Brent’s drop (-$5/mt) over the past week.

VLSFO availability in Singapore remains tight, with several suppliers advising lead times of 7-13 days. The port has also experienced a significant 728,000-bbl decline in net fuel oil imports so far in August, contributing to the stock drawdown.

The tight supply has supported the benchmark and pushed Singapore’s VLSFO price up by $12/mt over the past week, despite a decline in Brent futures.

Biofuels

Rotterdam’s B24-VLSFO HBE price has held steady in the past week. PRIMA assessed palm oil mill effluent methyl ester (POMEME) in the ARA at $1,332/mt on Friday, almost unchanged on the week. 

Singapore’s B24-VLSFO UCOME price has gained by $8/mt in the past week, while its B24-LSMGO UCOME price has come down by $19/mt. A $12/mt increase in VLSFO price has contributed to push Singapore’s B24-VLSFO UCOME price up.

Spot bio-bunker demand remains low in Singapore. Lead times for bio-bunker grades vary between 10-14 days among suppliers.

LNG

Rotterdam’s LNG bunker price has decreased by $10/mt over the past week, tracking the downward movement of the front-month NYMEX Dutch TTF Natural Gas contract.

The decline is attributed to improved natural gas production from Norway and high EU gas storage levels.

Singapore's LNG bunker price has come down by $30/mt. A 5.2 million mt/year production train at Chevron's Gorgon LNG plant in Australia has completed maintenance ahead of schedule, easing supply constraints in the region. 

Asian LNG benchmark could see downward pressure from easing supply in Australia, as the country is one of the major LNG cargo suppliers to Asian countries like Japan, China and South Korea.

By Konica Bhatt

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