World bunker indices may show a moderate uptrend next week

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

Over the Week 05, MABUX global bunker indices showed a moderate downward correction. The 380 HSFO index fell by 9.32 USD: from 490.19 USD/MT last week to 480.87 USD/MT. The VLSFO index, in turn, decreased by 8.46 USD (713.73 USD/MT versus 722.19 USD/MT last week). The MGO index also lost 35.10 USD (from 1076.50 USD/MT last week to 1041.40 USD/MT). We expect this is a short-run downward correction and the global bunker market still retains the potential for further uptrend.

Global Scrubber Spread (SS) – the price differential between 380 HSFO and VLSFO – remained virtually unchanged over the Week 05 – plus $0.86 ($232.86 vs. $232.00 last week), although the average increased by $9.66. In Rotterdam, SS Spread rose by $13.00 to $206.00 (vs. $193.00 last week), breaking the psychological $200 mark. In Singapore, the 380 HSFO/VLSFO price difference was flat at $268.00. Meantime, the SS Spread weekly averages in Rotterdam and Singapore also added $13.16 and $8.16, respectively. More information is available in the “Differentials” section at www.mabux.com.

EU gas inventories are still unusually high for this time of the year – at full across the EU and well above the five-year average for the winter heating season. The high volumes of gas in storage and the constant influx of LNG cargoes are easing supply concerns in the absence of most of the Russian pipeline gas.

Despite that the price of LNG as bunker fuel at the port of Sines (Portugal) unexpectedly rose significantly for the first time in the last 8 weeks and reached 1446 USD/MT on January 30 (plus 271 USD compared to last week). The price difference between LNG and conventional fuel was 390 USD on January 30: MGO LS at the port of Sines was quoted at 1056 USD/MT that day. We expect LNG bunker prices may fall again next week.

During the Week 05, the MDI index (comparison of MABUX market bunker prices (MBP Index) vs MABUX digital bunker benchmark (DBP Index)) maintained an underestimation of 380 HSFO fuel in all four selected ports. The underprice premium sharply decreased in Rotterdam to minus $34 from minus $123 last week. In the other selected ports, the undercharge ratio changed insignificantly and amounted to minus $ 125 in Singapore, minus $ 163 in Fujairah and minus $ 80 in Houston.

In the VLSFO segment, according to MDI, three selected ports: Singapore, Fujairah and Houston are still in the overcharge zone: plus $45, plus $28 and plus $16, respectively. Rotterdam remains the only VLSFO underestimated port: minus $24. Overprice margins have risen while underpricing has declined.

In the MGO LS segment, Fujairah remains the only overvalued port: plus $ 116 while overcharge ratio moderately increased. In all other ports, the MDI registered an underpricing of MGO LS: Rotterdam – minus $63, Singapore – minus $91 and Houston –  minus $12. The underprice levels narrowed slightly.

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.

The Port of Rotterdam Authority registered 29,029 sea-going vessel arrivals in 2022 – 0.5% up on the 28,876 seen in 2021. However, the number of inland vessels saw a slight decrease on the year, from 98,469 in 2021 to 97,459 in 2022. Looking ahead, the Port Authority noted that from July methanol ‘will be bunkered regularly’. ‘Ahead of this, the preconditions for safe bunkering have now been agreed with the parties involved,’ the Port of Rotterdam Authority said. Methanol was included on the European bunker hub’s 2022 marine fuel statistics. The total volume of traditional and bio-blended marine fuel oil and distillate products delivered in Rotterdam last year was 10,510,355 metric tonnes – up substantially on the 9,592,145 mt sold in 2021. However, LNG bunker volumes fell 45% on the year.

There are a lot of uncertainties regarding Russian fuel supply in the coming months, the key being whether Russia can place the fuel displaced from Europe elsewhere, and whether a planned price cap on Russia’s fuels would work as intended. Despite the current downward correction in the global bunker market, we are of option that there is still the potential for further growth. World bunker indices may show a moderate uptrend next week.

By Sergey Ivanov, Director, MABUX