LNG bunker premium in Rotterdam over Singapore climbs to almost year-high

The premium of LNG bunker fuel in Rotterdam over Singapore has widened to an 11-month high, as Asia experiences muted demand and Europe eyes supply-side concerns.

Platts, part of S&P Global Commodity Insights, assessed the price of LNG Bunker fuel in Rotterdam at $16.52/MMBtu Jan. 20. Across the basin, LNG bunker fuel in Singapore was assessed at $15.499/MMBtu.

This brings the premium of Rotterdam over Singapore to $1.022/MMBtu, the highest seen since Feb 23, 2024, when it stood at $1.083/MMBtu.

The wider European LNG complex has come under some bullish pressures as of late, whereas Asia remains somewhat bearish with a well-supplied cargo market and muted demand having knock-on effects on the LNG bunker market in the region.

In Europe, the market has been sensitive to supply-side concerns. Gas storages are depleting at a faster rate than the previous years and the Ukraine-Russia gas transit deal expired at the end of 2024, prompting concerns about the region's ability to secure adequate LNG.

Traders in the bunker market have reported that LNG bunker demand in Europe has been damped due to the higher prices.

"LNG is expensive. We might start to see vessels switching back when the price is closer to VLSFO," said one Atlantic-based trader.

Across the basin, bearish demand and competition with Malaysia and China have been weighing on the Singapore LNG Bunker premium to JKM, market sources said. As VLSFO prices have been lower than LNG, some ships such as bulk carriers have switched their fuel to fuel oil, sources said.

Recently LNG bunker prices in China and Malaysia have been declining, which weighed Singapore LNG bunker prices, the sources added. Singapore LNG bunker premium to JKM declined to $1.80/MMBtu on Jan. 21, from $2.30/MMBtu a month ago, Commodity Insights data showed.