MABUX: Bunker Weekly Outlook, Week 06, 2023
The Weekly Outlook was contributed by Marine Bunker Exchange (MABUX)
Over the Week 06, MABUX global bunker indices continued firm downtrend. The 380 HSFO index fell by 7.96 USD: from 484.38 USD/MT last week to 476.42 USD/MT. The VLSFO index, in turn, decreased by 20.64 USD (700.07 USD/MT versus 720.71 USD/MT last week), coming close to 700 USD mark. However, the most significant decline was registered in the MGO Index: minus 52.06 USD (from 1040.54 USD/MT last week to 988.48 USD/MT). At the time of writing, the market demonstrated uptrend resumption.
The Global Scrubber Spread (SS) - the price differential between 380 HSFO and VLSFO - declined moderately over the Week 06 - minus $12.68 ($223.65 vs. $236.33 last week), while the average also decreased by $3.84. In Rotterdam, the SS Spread fell by $16.00 to $195.00 (vs. $211.00 last week), dropping below $200. In Singapore, the 380 HSFO/VLSFO price difference saw the biggest decline, minus $23 to $255. At the same time, the SS Spread weekly averages in Rotterdam and Singapore remained virtually unchanged. Further information is available in the "Differentials" section at www.mabux.com.
Still, European gas prices are well below the records seen last year due to the mild weather at the start of the winter heating season, continued strong LNG inflows, and a rebound in Norwegian pipeline gas flows. Gas storage sites across Europe were more than 71% full as of February 1ю That’s well above the five-year average for this time of the year.
The price of LNG as bunker fuel фе the port of Sines (Portugal) decreased slightly and reached 1387 USD/MT on February 06 (minus 59 USD compared to the previous week). The price difference between LNG and conventional fuel was 448 USD as of February 06: MGO LS at the port of Sines was quoted at 939 USD/MT that day. The price difference remains significant and is unlikely to change drastically in the short term.
Over the Week 06, the MDI index (correlation of MABUX market bunker prices (MBP Index) vs MABUX digital bunker benchmark (DBP Index)) registered underestimation of fuel 380 HSFO at all four selected ports. Underprice premium widened moderately and amounted to: in Rotterdam - minus $ 117, Singapore minus $134, Fujairah minus $172 and Houston minus $81.
In the VLSFO segment, according to MDI, three selected ports: Singapore, Fujairah and Houston are still in the overcharge zone: plus $47, plus $30 and plus $34, respectively. Rotterdam remains the only port where VLSFO is undervalued: minus $24. Overcharge margins have slightly increased, while underpricing has not changed.
In the MGO LS segment, Houston moved back into the overprice zone joining Fujairah: plus $39 and plus $176, respectively. In the other two ports, the MDI index registered an underestimation of MGO LS: Rotterdam - minus $ 73, Singapore - minus $ 72.
More information on the correlation between market prices and the MABUX digital benchmark is available in the “Digital Bunker Prices” section at www.mabux.com.
According to DNV, there were no new confirmed orders for LNG-fuelled ships in January. Despite the absence of LNG-fuelled vessel orders last month, DNV highlighted a drop in gas prices to a level where LNG bunkering is for the time being getting more competitive. January did see two methanol fuelled bulk carriers ordered by Cargill. The total number of LNG-fuelled ships ordered in 2022 fell slightly year-on-year, from 240 in 2021 to 222.
The EU embargo on imports of refined petroleum products from Russia came into effect on Sunday, February 5. However, Russia had diverted most of its fuel oil and vacuum gasoil (VGO) exports to Asia and the Middle East even before the EU embargo. Last month, the European Union took less than 5% of Russia’s fuel oil and VGO, with Greece, Latvia, and Italy importing small volumes of those products, and these volumes could easily be redirected to other destinations, mostly in Asia, as well. For now, we expect Global bunker indices keep the potential for uptrend next week.
By Sergey Ivanov, Director, MABUX
