MABUX: Bunker Weekly Outlook, Week 38, 2022

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

Over the Week 38, MABUX global bunker indices continued moderate sliding downward. The 380 HSFO index fell by another 15.93 USD: from 532.70USD/MT last week to 516.77 USD/MT. The VLSFO index, in turn, fell by 11.55 USD: from 794.96 USD/MT to 783.41 USD/MT. The MGO index lost 47.69 USD (from 1159.95 USD/MT to 1112.26 USD/MT), remaining below the 1200 USD mark for the third week in a row.

The Global Scrubber Spread (SS) weekly average - the price differential between 380 HSFO and VLSFO –continued to increase over the Week 38 - plus $4.38 ($266.64 vs. $262.26 last week). In Rotterdam, the average SS Spread declined: $241.00 vs. $248.50 (down $7.50 ). In Singapore, the average weekly price differential of 380 HSFO/VLSFO added plus $17.83 ($286.83 vs. $269.00 last week). The indicators of the Global SS Spread and the values of SS Spread in the largest hubs are practically at the same level. More information is available in the Price Differences section of mabux.com.

Gas prices are now down by nearly 50% from their peak earlier in the summer, when Russia's decision to stop all gas flows through the Nord Stream 1 pipeline due to repair works triggered fears of widespread rationing across the continent. Russian imports typically account for 40% of the European total, but they are currently running at less than 10% of imports, reflecting European success in sourcing alternative gas over recent months, largely in the form of LNG. $Price for LNG as a bunker fuel at the port of Sines (Portugal) fell on September 19 by another 430 USD/MT to 3324.00 USD/MT (versus 3754 USD/MT a week earlier). LNG prices are still nearly three times higher than the most expensive type of traditional bunker fuel: the price of MGO LS at the port of Sines was quoted on September 21 at 1114.00 USD/MT.

Over the Week 38, the MDI index (comparison of MABUX MBP Index (market bunker prices) vs MABUX DBP Index (MABUX digital bunker benchmark)) showed an underpricing of 380 HSFO fuel grade in all four selected ports. The underestimation margins continued to grow and amounted for: Rotterdam - minus $105, Singapore - minus $152, Fujairah - minus $153 and Houston - minus $51.

VLSFO fuel grade, according to MDI, remained, on the contrary, overpriced in all selected ports: plus $11 in Rotterdam, plus $36 in Singapore, plus $40 in Fujairah and plus $22 in Houston. In this fuel segment, the MDI index did not have any firm dynamics: the overprice premium down all ports except of Singapore.

In the MGO LS segment, MDI registered overpricing in two ports out of four selected over the Week 38: Fujairah - plus $ 209 and Houston - plus $17. In Rotterdam and Singapore, MGO LS fuel remained undervalued: minus $ 31 and minus $ 91. MDI index increased for all selected ports except of Singapore.

China exported 1.94 million tonnes of very-low-sulphur fuel oil (VLSFO) in August, measured mostly by sales from bonded storage for vessels plying international routes, data from the General Administration of Customs showed. Data on general merchandise exports and imports and on container traffic show international shipping activity in Chinese ports, and therefore opportunities to supply VLSFO to foreign ships, was weak in August. Fuel oil imports into bonded storage, including both high-sulphur and low-sulphur products, were down 64.18% from a year earlier at 0.67 million tonnes.

Meanwhile, Russian President Vladimir Putin's move on Sep.21 to call up 300,000 reservists, marking an escalation of the war in the Ukraine, could further hurt supply and send bunker prices into upward trend.

The global bunker market is still in a state of high volatility. At the same time, there are premises for turning price indexes into upward deviation in the market.

By Anastasia Pervova, Marketing analytic, MABUX