The MABUX global bunker indices did not demonstrate a sustainable trend during Week 34, shifting irregularly.
The 380 HSFO index increased by US$1.59 from last week’s level of US$560/MT to US$562/MT.
The VLSFO index, on the other hand, declined by US$1.22. The MGO index increased by US$21.46. The market was in a moderate downturn at the time of publication.
The Global Scrubber Spread (SS) – the price difference between 380 HSFO and VLSFO – fell by US$2.81 but remained near the US$100 mark (SS breakeven point).
On the other hand, the weekly average climbed by US$2.40. The SS Spread in Rotterdam increased significantly in a single week, increasing from US$39 to US$54. The weekly average of the Rotterdam SS Spread increased by US$8.83.
Only in Singapore has the price difference between 380 HSFO and VLSFO decreased: negative US$14. The weekly average fell by US$3.50 as well. “The present market dynamics imply that the SS Spread may have a minor upward correction,” stated a MABUX official.
According to Global Data, there is a projected surge in LNG demand that will lead to a doubling of global capacity by 2027. The United States is poised to maintain its dominant position in the global LNG market, driving substantial capacity growth within the next four years. This growth is expected to contribute to 60% of the total new capacity additions for North America.
The present annual worldwide liquefaction capacity of 487.3 million tonnes is expected to rise to 958 million tonnes. Europe is emerging as a big catalyst for additional US LNG production.
Over the last 18 months, Europe has emerged as one of the most important markets for US LNG dealers. As the resumption of Russian pipeline gas supplies remains unclear, this tendency is projected to continue.
Despite the sanctions, Russia is expected to build 67.5 million tonnes of LNG capacity yearly over the next four years, ranking second only to China. This growth puts it ahead of Qatar, which is expected to raise capacity by 48 million tonnes per year.
The price of LNG as bunker fuel in the port of Sines (Portugal) has risen significantly yet again, hitting US$899/MT on 21 August. This is an increase of US$78 over the previous week. Concurrently, the price difference between LNG and conventional fuel has reduced to US$76 as of 21 August, favouring LNG. MGO LS was valued at US$975/MT at the Sines port on the same day.
The MDI index (the ratio of market bunker prices (MABUX MBP Index) to the digital bunker benchmark MABUX (MABUX DBP Index) showed some signs of market stabilisation during Week 34, however, the undervalued trend remained dominant.
Fujairah remained the only port with an undervalued status in the 380 HSFO category, with the average weekly ratio lowering by 1 point. The MDI index detected overpricing in the other three ports. The weekly average premium fell by 9 points in Rotterdam but grew by 9 points in Singapore. The MDI index in Houston remained unchanged.
Only Singapore exhibited an overcharge in the VLSFO category, according to MDI, with the weekly average jumping by 6 points. The other ports continued to be undervalued. The weekly average ratio in Rotterdam remained unchanged, but Fujairah and Houston both saw decreases of 9 and 21 points respectively. These two ports are nearly aligned with a 100% correlation between market prices and the digital benchmark.
All chosen ports continued to be undervalued in the MGO LS category, with the average underpricing down 1 point in Rotterdam and 5 points in Houston, but up 14 points in Singapore and 1 point in Fujairah.
According to VPS, presently 3.8% of all VLSFOs evaluated had at least one off-spec parameter. This compares positively with off-spec rates of 11.4% for HSFO fuels and 16.9% for MGO fuels. However, the off-specifications connected with VLSFO are possibly more problematic than those related to HSFO and MGO.
The most common VLSFO off-spec factors are sulphur, water, cold-flow properties, and cat fines. Sulphur off-specification is the most prevalent of all VLSFO off-specifications, accounting for more than 30% of all off-specifications.
“We consider the global bunker market is currently in the mode of forming a sustainable trend. Irregular changes in global bunker indices will prevail next week,” stated Sergey Ivanov, director of MABUX.
