Fuel Switch Snapshot: LNG-VLSFO premiums double in a month

LNG premiums have soared

Singapore’s LNG up to premium over B24-LSMGO

Bio-bunker prices drop in key bunker ports

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

While VLSFO-equivalent prices for LNG and B24-VLSFO have shown little change over the past week, they have shifted sharply in the past month. LNG, which previously traded at a discount to B24-VLSFO, now commands a substantial premium in major ports like Rotterdam and Singapore.

Rotterdam’s LNG holds a significant $70/mt premium over its B24-VLSFO HBE price, compared to a $61/mt discount last month. Similarly, Singapore’s LNG has flipped from a $52/mt discount to an identical $52/mt premium over its B24-VLSFO UCOME price in the past month.

Singapore’s LNG has even climbed to a narrow $1/mt premium over its B24-LSMGO grade, a reversal from its $20/mt discount last week and $89/mt discount last month.

Meanwhile, LNG now stands at a whopping $228/mt premium over pure VLSFO in Rotterdam. In Singapore, LNG is $208/mt more expensive than pure VLSFO. LNG's premiums have jumped by more than $100/mt in a month.

VLSFO

VLSFO prices in Singapore and Rotterdam have remained almost unchanged in the past week. Rotterdam has seen a $3/mt gain, while Singapore has witnessed a $4/mt drop.

Availability of VLSFO remains tight in Singapore, where 10 days of lead time is recommended.

Supply pressures have eased slightly across VLSFO, LSMGO and HSFO grades in the ARA this week, a trader told ENGINE. VLSFO availability has returned to normal in the past week, with lead times of 3-5 days advised for the grade.

Biofuels

Singapore’s B24-VLSFO UCOME price has shed $3/mt in the past week, while its B24-LSMGO UCOME price has decreased by a sharp $15/mt. The bigger drop in the B24-LSMGO price is partly because of a $19/mt decline in the underlying ENGINE conventional LSMGO price.

The strengthening of used cooking oil (UCO) prices in China has exerted upward pressure on UCOME export prices, PRIMA Markets said.

Rotterdam biofuel benchmarks have almost mirrored the declines seen in Singapore. The B30-VLSFO HBE price in Rotterdam has edged down by $3/mt, while the B30-LSMGO HBE price has declined by a sharp $17/mt.

LNG

Rotterdam's LNG bunker price has dropped by $8/mt to $877/mt in the past week. The downward trend reflects a corresponding decrease in the underlying Dutch TTF Natural Gas contract. While European gas prices have dipped, colder-than-average temperatures across Northern Europe are expected to limit further price drops.

Singapore's LNG bunker price has gained by $6/mt in the past week, tracking gains in the NYMEX Japan/Korea Marker (JKM) contract. Despite a forecast for colder weather in Northeast Asia next week, demand prospects remains subdued for the near term.

By Konica Bhatt, Nithin Chandran and Debarati Bhattacharjee

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