Fuel Switch Snapshot: Bio premiums widen on soaring POMEME price

LNG at wide discounts to biofuels and most conventionals

Rotterdam’s bio-bunker premiums rise despite higher Dutch rebates

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

LNG continues to be the cheapest alternative for dual-fuel ships in Rotterdam, while scrubber-fitted ships bunkering in Singapore will still see HSFO priced the lowest.

Biofuel premiums over conventional fuels have gone up. The price of B24-VLSFO has gained by $18/mt in Rotterdam, and by $2/mt in Singapore.

VLSFO

Rotterdam's VLSFO benchmark has remained unchanged in the past week, while Singapore's VLSFO benchmark has moved a marginal $2/mt higher.

Rotterdam's VLSFO availability remains normal, and traders recommend lead times of 4-5 days.

VLSFO availability in Singapore has tightened for prompt delivery. Traders recommend lead times in a wide span of 5-14 days, up from 3-12 days in the previous week.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has climbed $18/mt higher in the past week. This price is for a blend of an advanced biofuel feedstock that is rebated through the Dutch hernieuwbare brandstofeenheden (HBE) system.

The Dutch rebate for B24-VLSFO HBE continues to rise and has added $3/mt on the week to reach $69/mt. Despite bigger Dutch rebates, Rotterdam’s B24-VLSFO HBE price has gone up on the back of a big gain in the underlying price of palm oil mill effluent methyl ester (POMEME). POMEME is produced from one of the most popular advanced biofuel feedstocks.

Rotterdam’s B24-VLSFO premium over its VLSFO has widened by $18/mt to $139/mt in the past week.

Singapore’s B24-VLSFO UCOME bunker price has made a modest gain of $4/mt over the past week. Singapore's biofuel bunker market is very quiet at the moment, according to a trader.

LNG

Singapore and Rotterdam’s LNG bunker prices have moved marginally higher in the past week. Rotterdam’s LNG bunker benchmark has seen a $6/mt rise and Singapore’s benchmark has gained $4/mt.

Rotterdam’s LNG is now priced $131/mt lower than its VLSFO, almost steady from the week prior. Rotterdam’s LNG discount to B24-VLSFO has widened by $13/mt to $270/mt over the week.

LNG is in good availability and has been offered by bunker 3-4 suppliers in Rotterdam, which is rare in the market and added some downward pressure on bunker delivery costs, a source said.

Rotterdam has historically been known for lower LNG bunker delivery costs than other locations like Singapore. A slight delivery cost increase is expected in Rotterdam this month, but its delivery costs are still expected to be around a third lower than in Singapore, a trader told ENGINE.

By Konica Bhatt and Erik Hoffmann

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