In the 22nd week, the MABUX global bunker index remained flat without any clear trend. The 380 HSFO index increased by $7.38, rising to $551.27/MT from $543.89/MT last week. Meanwhile, the VLSFO index fell by $3.63 ($649.26/MT against $652.89/MT last week). The MGO index symbolically fell by $0.35 ($839.21/MT from $839.56/MT last week). At the time of writing, a gradual upward trend continues in the global bunker market.
The MABUX Global Scrubber Spread (SS) (the price difference between 380 HSFO and VLSFO) has consistently declined to minus $11.01 ($110.14 compared to $112.56 last week), falling below the $100.00 SS breakeven point for the first time since October 10, 2023. The weekly average also fell by $9.21. In Rotterdam, the SS spread fell by $11.00 ($79.00 from $90.00 last week), well below the $100.00 level. The port’s weekly average fell by $3.33. In Singapore, the 380 HSFO/VLSFO price difference fell the most significantly to minus $20.00 ($64.00 compared to $84.00 last week), with the weekly average falling by $23.00. Currently, the SS spread shows a sustained downward trend. Stabilizing SS spreads below $100 will negatively impact scrubber profitability and lengthen payback periods while increasing demand for traditional and alternative bunker fuels. We expect SS spreads to continue to tighten in the near term. For more information, see the “Differences” section on mabux.com.
European natural gas benchmark prices rose last week due to growing supply concerns and forecasts of reduced wind power generation. Unplanned outages in Norway, planned maintenance of some gas assets, growing natural gas demand in Asia and the expiration of the current gas transit contract for Russian pipeline gas via Ukraine at the end of 2024 could further restrict gas supplies in Europe and drive up prices. In week 22, the European gas benchmark TTF continued its gradual rise, increasing by 0.530 EUR/MWh (33.534 EUR/MWh against 33.004 EUR/MWh in the previous week), but has declined in the past three trading days.
The price of LNG as bunker fuel in the port of Sines (Portugal) continued to rise, reaching USD 768/ton on May 27 (USD 40 more than the previous week). At the same time, the price difference between LNG and conventional fuels on May 27 narrowed, with LNG now trading at USD 40 (USD 89 last week). MGO LS was traded at USD 808/ton in the port of Sines that day. More information can be found in the LNG bunkering section of mabux.com.
In the 22nd week, the MDI index (the correlation ratio between market fuel oil prices (MABUX MBP index) and the MABUX digital fuel oil benchmark (MABUX DBP index)) showed the following trends across major global hubs including Rotterdam, Singapore, Fujairah and Houston:
In the 380 HSFO segment, all selected ports continue to be undervalued: the weekly average increased by 6 points in Rotterdam, 15 points in Singapore, 18 points in Fujairah, and 6 points in Houston.
In the VLSFO segment, all ports were undervalued, according to the MDI, with weekly average levels up four points in Singapore and three points in Houston, down two points in Rotterdam and one point in Fujairah, where the correlation between market prices and the MABUX digital benchmark remained close to 100%.
In the MGO LS segment, only the Port of Houston remains overvalued, with its weekly average up 7 points and the MDI index showing a correlation between market prices and the MABUX digital benchmark of over 100%. All other ports remain undervalued. Weekly average levels fell a further 3 points in Rotterdam and 1 point in Singapore, while Fujairah rose 13 points. Singapore’s MDI index is above $100.
By the end of the week, the balance of overvalued/undervalued ports, and the trend towards undervaluation of bunker fuels, remained largely unchanged across all market segments.
For more information on the correlation between market prices and the MABUX Digital Benchmark, please visit the “Digital Bunker Prices” section on mabux.com.
According to DNV, the gap between LNG fuel tonnage and the infrastructure needed to supply the fuel is widening. Nevertheless, industry players are waiting for market guarantees to invest in LNG-fueled ships. There is a clear shortage of these ships, and classification societies expect this shortage to become apparent within about 12 months. DNV estimates that 2.3 million tonnes of LNG will be bunkered in 2023, which represents 1% of the global marine fuel market. This market is growing rapidly, with LNG consumption expected to increase by 400% to reach 11 million tonnes by 2026.
The downward trend in global fuel oil markets has reached its limit and the rise in fuel oil prices is expected to become sustainable next week.
Source: Sergey Ivanov, Director of MABUX
