Fuel Switch Snapshot: VLSFO retains cost advantage

Price gap between VLSFO and LNG holds firm

Singapore's bio-premium over LNG soars

Bio-bunker demand low in Rotterdam and Singapore

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

VLSFO remains the cheapest bunkering alternative for dual-fuel ships in Rotterdam and Singapore, even with estimated EU Allowance (EUA) costs included in their bunker fuel costs. HSFO is the cheapest option for scrubber-fitted ships.

LNG prices dropped over the past week, but they still remain $9-22/mt higher than VLSFO in Rotterdam and $34-40/mt higher in Singapore.

Rotterdam’s bio-bunker premium over LNG has remained steady, while Singapore's bio-premium over LNG has climbed $17/mt higher in the past week.

B24-VLSFO blend now costs $130-141/mt more than LNG in Rotterdam and $90-95/mt more than LNG in Singapore.

VLSFO

Rotterdam’s VLSFO benchmark has dropped by $15-19/mt in the past week, depending on whether we include estimated EUA costs for voyages between EU ports.

The price has largely tracked Brent's downward trend. Availability of the grade is normal in Rotterdam, and a trader recommends lead times of 3-5 days.

Singapore’s VLSFO benchmark remained steady in the past week, with a $2/mt marginal gain noted.

Most suppliers recommend lead times of up to 14 days, while some can accommodate stems within four days. This represents a tightening from a week prior, when traders recommended shorter lead times ranging between 2-9 days.

Biofuels

Rotterdam’s B24-VLSFO HBE price has slipped lower by $15-18/mt in the past week, which includes the estimated EUA costs. A steep decline of $60/mt in the price of palm oil mill effluent methyl ester (POMEME) has pulled the benchmark lower.

Overall, demand for biofuel blends has been low in Rotterdam and in the wider ARA hub, two sources say.

In contrast, Singapore’s B24-VLSFO price has surged by $18-19/mt in the past week. The bio-bunker price has gained despite a $5/mt drop in the UCOME FOB China benchmark, according to PRIMA Markets.

Demand for biofuel blends was mostly limited in Singapore last week, two sources say. Availability has been normal in the port, and traders recommend lead times of at least 10 days to ensure full coverage from suppliers.

LNG

Rotterdam's LNG bunker price has fallen by $13-17/mt over the past week, after rising for two consecutive weeks.

The price drop mirrors the decline in the front-month NYMEX Dutch TTF Natural Gas benchmark, which has declined amid projections of rising gas storage levels across Europe.

Singapore's LNG bunker price has remained relatively steady, with a marginal $1-3/mt rise in the past week.

By Konica Bhatt

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