Moderate decline in global bunker indices, reports MABUX

During the eighth week of 2024, Marine Bunker Exchange (MABUX) global indices saw a moderate decrease. The 380 HSFO index declined to US$518.15/MT, nearing the US$500 threshold, the VLSFO index decreased to US$672.02/MT and the MGO index experienced a loss of US$16.36 to US$912.29/MT.

“At the time of writing, the market has shown a moderate upward correction,” pointed out a MABUX official.

The Global Scrubber Spread (SS), which denotes the price disparity between 380 HSFO and VLSFO, saw a marginal increase of US$0.19. The weekly average experienced a rise of US$1.04. Rotterdam observed a slight decrease in the SS Spread, reaching minus US$4 to US$115, edging closer to the US$100 breakeven mark. The weekly average declined by US$1.33. Meanwhile, in Singapore, the price gap between 380 HSFO and VLSFO narrowed by US$1, although it remained near the US$200 threshold. Conversely, the weekly average increased by US$11.33.

“Thus, the dynamics of SS Spread show no clear trend yet,” noted a MABUX official.

Shell forecasts that global LNG demand will increase by more than 50% by 2040, primarily due to the transition from coal to gas in China and South Asian countries’ power generation and industrial sectors.

According to Shell’s LNG Outlook 2024, global LNG trade reached 404 million tonnes in 2023, a slight uptick from 397 million tonnes in 2022. However, this growth is constrained by tight LNG supplies, which have kept prices and volatility above historical levels. Despite certain regions experiencing peak LNG demand, Shell predicts a continuous global increase, reaching around 625-685 million tonnes per year by 2040.

Furthermore, China is expected to lead LNG demand growth in the current decade as it seeks to reduce carbon emissions by shifting from coal to gas. Also, Shell highlights that despite a well-supplied global market in 2023, the absence of Russian pipeline gas supply to Europe and limited growth in LNG supply over the past year have resulted in a structurally tight global gas market.

Additionally, the price of LNG as bunker fuel at the port of Sines (Portugal) has continued to rise, reaching US$616/MT on 19 February, up by US$38 compared to the previous week. At the same time, the price difference between LNG and conventional fuel on 19 January has slightly decreased, now standing at us$316 in favour of LNG compared to US$391 the previous week, with MGO LS quoted at US$932/MT in the port of Sines.

During week 08, the MDI index, which compares market bunker prices (MABUX MBP Index) to the MABUX digital bunker benchmark (MABUX DBP Index), exhibited the following trends across four selected ports: Rotterdam, Singapore, Fujairah, and Houston:

In the 380 HSFO segment, all four selected ports remained underpriced. Rotterdam’s weekly average underpricing decreased by 28 points, while Singapore, Fujairah, and Houston experienced increases of 9, 11, and 9 points, respectively. The MDI index in Fujairah remained above the US$100 mark.

For the VLSFO segment, Rotterdam has shifted into the overcharge zone, where all four selected ports are currently positioned. The weekly average overprice premiums increased by 30 points in Rotterdam but decreased by 9 points in Singapore, 9 points in Fujairah, and 19 points in Houston.

Concerning the MGO LS segment, Houston remained the only overcharged port, with the average weekly ratio increasing by 6 points. The other three ports were undervalued, with average weekly underprice margins decreasing by 78 points in Rotterdam, 17 points in Singapore, and 11 points in Fujairah. Underprice levels in Rotterdam and Singapore dipped below the US$100 mark.

“In the absence of firm movers, we expect global bunker indices to remain relatively stable next week,” said Sergey Ivanov, director of MABUX.

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