MABUX: Bunker Weekly Outlook, Week 24, 2022

We expect bunker prices to continue moving in different directions next week

The Weekly Outlook was contributed by Marine Bunker Exchange (MABUX)

Over the Week 24, the world bunker indices did not have a firm trend and showed moderate irregular changes. The 380 HSFO index fell by 6.11 USD: from 766.23 USD/MT to 760.12 USD/MT. The VLSFO index, in turn, rose by 5.02 USD: from 1088.43 USD/MT to 1093.45 USD/MT, coming close to $ 2000 mark. The MGO index also showed a growth: plus 17.15 USD (from 1374.52 USD/MT to 1391.67 USD/MT) . The VLSFO and MGO indices are at their all-time highs.

The Global Scrubber Spread (SS) weekly average – the price difference between 380 HSFO and VLSFO - continued its firm upward trend over the week – plus $ 32.06 ($ 332.26 versus $ 300.20 last week). In Rotterdam, the average SS Spread rose more significantly: $321.50 vs. $250.17 (up $71.33 from last week). In Singapore, the average weekly price difference of 380 HSFO/VLSFO also rose by $20 to over $500: $502.50 from $482.50 last week, but dropped back to $475 on June 15. For more information, see "Price Difference" on mabux.com.

Natural gas prices in Europe have turned again into moderate growth. The price for LNG as bunker fuel in the port of Sines (Portugal) rose on June 14 by 171 USD to 1992 USD/MT (versus 1821 USD/MT a week earlier). LNG prices are still significantly higher than those of traditional bunker fuels: the price index for MGO LS in the port of Sines was quoted at 1508 USD/MT as of June 14. Meanwhile, the development of 25 LNG export terminal projects in the US could result in more than 90 million tonnes of greenhouse gas (GHG) emissions a year, according to US-based NGO the Environmental Integrity Project (EIP). In March 2022, America exported 7.6 million tonnes of LNG, quadruple the amount four years earlier.

Over the week 24, the MDI index (comparison of MABUX MBP Index (market bunker prices) vs MABUX DBP Index (MABUX digital bunker benchmark)) continued to register an underestimation of 380 HSFO fuel in three ports out of four selected: Rotterdam - minus $ 14, Singapore - minus $ 94 and Fujairah - minus $3. The only overpriced port is Houston - plus $11. Underprice premium continued to rise slightly, while overcharge ratio declined.

VLSFO fuel grade, according to MDI, remained overpriced at all four selected ports: plus $77 in Rotterdam, plus $198 in Singapore, plus $170 in Fujairah and plus $32 in Houston. Here, the MDI index had no a firm trend, increasing in Rotterdam and Fujairah, but declining in Singapore and Houston. VLSFO fuel remains the most overvalued segment in the global bunker market.

As for MGO LS, over the week MDI registered an undercharge of this type of fuel in two ports out of four selected: in Rotterdam - minus $ 2 and in Singapore - minus $ 16. In other ports, the overcharge margins were: Fujairah - plus $ 137 and Houston - plus $27. Undercharge premium is gradually decreasing while overcharge one is going up.
 
Thus, high volatility remains in the global market. There is still no any firm trend in the correlation of market and digital MABUX bunker prices benchmark (MDI).

The 4,115,500 metric tonnes (mt) of marine fuel sold in Singapore in May was the highest monthly total of the year. Last month’s total represented a 1.1% increase on the 4,071,800 mt of bunkers sold in May 2021 and a 10.0% increase on the 3,742,300 mt registered in April.. During the first five months of the year a total of 19,162,900 mt of marine fuel was sold in the Port of Singapore – 9.4% down on the 21,150,700 mt of bunker sales in the corresponding period in 2021. The number of vessels calling for marine fuel at the global bunker hub rose from 3,025 in April to 3,168 in May.

There is some stabilization of fuel indices registered in the market recently. We expect bunker prices to continue moving in different directions next week.

By Sergey Ivanov, Director, MABUX