MABUX: Bunker Weekly Outlook, Week 02
The Weekly Outlook was contributed by Marine Bunker Exchange (MABUX) AB
Over the Week 02, MABUX global bunker indices continued moderate decline. The 380 HSFO index fell by 13.38 USD: from 469.64 USD/MT last week to 456.26 USD/MT. The VLSFO index, in turn, lost 8.51 USD (655.30 USD/MT versus 663.81 USD/MT last week). The MGO index also fell by 6.28 USD (from 1014.99 USD/MT last week to 1008.71 USD/MT), coming close to the psychological mark of 1000 USD. At the time of writing, the global bunker market was in a state of upward correction.
Global Scrubber Spread (SS) - the price differential between 380 HSFO and VLSFO - showed a slight increase over the Week 02 - plus $4.87 ($199.04 vs. $194.17 last week), still nearby the 200 USD mark. In Rotterdam, SS Spread rose by $13.00 to $163.00 from $150.00 last week. In Singapore, the price difference of 380 HSFO/VLSFO decreased by $4.00 ($210.00 vs. $214.00 last week). At the same time, the SS Spread averages in Rotterdam and Singapore remained virtually unchanged, showing an increase of $0.67 and $0.84 respectively. More information is available in the "Differentials" section at mabux.com.
The price of LNG as bunker fuel in the port of Sines (Portugal) continued to decline modestly and reached 1565 USD/MT as of January 09 (minus 30 USD compared to the previous week). The price difference between LNG and conventional fuel on January 09 was 597 USD: MGO LS at the port of Sines was quoted at 968 USD/MT that day. The downward trend in the gas market is due to unseasonably warm winter temperatures since last month that left both the European and U.S. heating markets sufficiently supplied.
During the Week 02, the MDI index (comparison of MABUX market bunker prices (MBP Index) vs MABUX digital bunker benchmark (DBP Index)) remained fuel 380 HSFO underestimated in all four selected ports, while the changes were minimal. Undercharge margins were registered as: Rotterdam - minus $122, Singapore minus $135, Fujairah minus $160 and Houston minus $73.
In the VLSFO segment, according to MDI, the port of Fujairah recorded a 100-percent correlation between the market price and the digital benchmark. In other ports, MDI showed some narrowing of underprice premium: Rotterdam - minus $ 62, Singapore - minus $ 8 and Houston - minus $ 16.
In the MGO LS segment, Fujairah remains the only overvalued port: plus $156. In all other ports, the MDI index registered an undervaluation of MGO LS: Rotterdam - minus $79, Singapore - minus $70 and Houston - minus $26. Undercharge premium narrowed, while overcharge one widened.
More information on the correlation between market prices and the MABUX digital benchmark is available in the “Digital Bunker Prices” section at mabux.com.
As per DNV report, the total number of LNG-fuelled ships ordered in 2022 fell slightly year-on-year, from 240 in 2021 to 222. Of these 222, 74% were for boxships and pure car and truck carriers (PCTC) while product tankers accounted for 9% of orders. The total count of LNG fuelled ships in operation and on order now stands at 876. A total of 104 new LNG-fuelled ships entered operation during 2022, representing a 41 % growth within the sailing fleet. The total number of ships with alternative fuels ordered in 2022 was 275. In addition, more than 50 LPG carriers were ordered with LPG dual fuel systems. Methanol was the second most popular alternative fuel choice, with 35 ships ordered, bringing the total count to 82 ships. Thirty of these were large container vessels. A total of 18 ships capable of running on hydrogen fuel were ordered, ranging from small crew transfer vessels (CTV) for the offshore wind industry which are built to operate fully on hydrogen, to large cruise vessels installing hydrogen powered fuel cells that cover a smaller portion of the energy demand onboard. The ‘far majority’ of ships ordered with alternative fuels in 2023 is expected to be LNG dual fuel. While the elevated price levels for natural gas will continue to delay the widespread adoption LNG as fuel in the marine industry.
The European Union’s ban on Russian oil products set to come into force on February 5 could send bunker indices up. We expect slight upward evolution to prevail in Global bunker market next week.
By Sergey Ivanov, Director, MABUX