The Weekly Outlook was contributed by Marine Bunker Exchange (MABUX)
On a Week 07, the MABUX World Bunker Index continued firm upward evolution. The 380 HSFO index rose by 9.67 USD: from 575.10 USD/MT to 584.77 USD/MT. The VLSFO index went up by 14.06 USD: from 734.63 USD/MT to 748.69 USD/MT. The MGO index gained the most: plus 18.80 USD (from 862.75 USD/MT to 881.55 USD/MT). At the same time, there are some signs of a possible downward correction: the next few days will clarify the situation on the global bunker market.
The Global Scrubber Spread (SS) weekly average - the difference in price between 380 HSFO and VLSFO -- showed a slight growth of $5.94 during the week, breaking $160.00 mark ($162.01 vs. $156.07 last week). At the same time, in Rotterdam, the average SS Spread increased from $163.67 to $168.83 (plus $5.16 compared to the week before). However, the most significant increase of the SS Spread average was registered in Singapore: plus $20.50 to $210.00 from $189.50 last week. Thus, the SS Spread’s weekly average in Singapore exceeded $ 200 (for comparison, the absolute maximum SS Spread at the port was registered on January 09, 2020 - $ 347.00). More information is available in the Price Differences section on www.mabux.com.
LNG prices have begun to rise again in European markets. In particular, the price of LNG as a bunker fuel at the port of Sines (Portugal) on February 14 rose by 112 USD to 2329 USD/MT versus 2217 USD/MT last week. LNG prices are still significantly higher than those of traditional bunker fuel grades. The price index of MGO LS at the port of Sines was at around 878 USD/MT on February 14.
During Week 07, the correlation of MABUX MBP Index (Market Bunker Prices) vs MABUX DBP Index (Digital Bunker Prices benchmark) showed that 380 HSFO fuel was overpriced in two ports out of four selected: in Rotterdam - plus $7 and in Houston - plus $ 2. In Singapore and Fujairah, the MABUX MBP/DBP Index registered an undercharge of 380 HSFO by $2 and $9 respectively. The MABUX MBP/DBP Index continues to shift towards the underpricing of 380 HSFO fuel grade.
VLSFO fuel grade, according to the MABUX MBP/DBP Index, remained significantly overpriced in all selected ports: plus $33 in Rotterdam, plus $39 in Singapore, plus $47 in Fujairah and plus $9 in Houston. Overall, the MABUX MBP/DBP Index ratio for VLSFO fuel has not changed significantly during the week.
As for MGO LS, the MABUX MBP/DBP Index registered an underestimation of this fuel grade in three of the four selected ports: Rotterdam - minus $ 13, Singapore - minus $ 17 and Fujairah - minus $ 6. The only port where the MABUX MBP/DBP Index recorded overcharge was Houston - plus $ 31. In MGO LS segment, the Index is gradually shifting towards overpricing: in Singapore, the undercharge margin decreased by $ 13, and in Fujairah - by $ 23.
According to a new study from environmental lobby group, T&E, the FuelEU Maritime regulation put forward by the European Commission last year, would require ship operators to reduce the lifecycle carbon footprint of bunker fuels in a phased approach. This is intended to eventually remove fuel oil powered vessels and drive the switch to more sustainable fuels. However, the regulation would in effect support the use of LNG-fuelled vessels until well into the 2040s. As per the report, ‘with costs far cheaper than genuinely clean alternatives, LNG will make up 23% of the total energy used in EU shipping by 2030, up from 6% today.’ T&E’s modelling is based on ship order books for ships until 2023 with future LNG ship sales assumed based on the increase due to fuel oil being no longer compliant with the regulation anymore.
We expect bunker fuel prices to move into a downward correction next week as Russia-Ukraine tensions gradually cool and the energy crisis in Europe eases.
By Sergey Ivanov, Director, MABUX
