Reuters reports that Singapore, the world’s largest bunkering hub, will see spot premiums for marine biofuels rise in early 2024 due to factors including weak demand, lower biofuel feedstock costs and stronger residual fuel oil benchmarks. It fell due to
aAccording to Reuters, the marine biofuels market has seen growth over the past two years as shippers seek low-carbon alternative fuels, but the overall Demand remains sluggish.
A common benchmark for marine biofuels, the B24 blend consists of 24% used cooking oil methyl ester (UCOME) and 76% very low sulfur fuel oil (VLSFO). According to Reuters, spot delivery premiums for B24 have fallen to around $140 per tonne compared to Singapore VLSFO prices in January, before rising to $145-170 per tonne by the end of 2023 and over $200 in Q3 2023. It has fallen from the level of .
The tightening of price spreads this year is believed to be due to higher traditional VLSFO bunker prices due to increased demand due to shipping disruptions in the Red Sea.
At the same time, UCOME prices in Asia are constrained from Q4 2023 due to slowing demand and abundant supply, as well as weakness in the European market.
As a reminder, bunker sales of biofuel blends increased to 520,000 tonnes in 2023, more than tripling from 140,000 tonnes in 2022. Meanwhile, industry experts and fuel suppliers expect this positive trend to continue.
