Asia's LNG bunker fuel appetite to remain strong in 2025

Asia is expected to see stronger LNG bunker fuel demand for the remainder of 2025, driven by a narrowing LNG-VLSFO price spread, a surge in orders for LNG-fueled ships, and increasing adoption of alternative fuels. This trend is likely to support LNG prices amid rising competition in the marine fuel market, as demand for LNG as a marine fuel remains robust in major bunkering ports throughout the region.

In the first half of 2024, on average, the Singapore-delivered marine fuel 0.5%S price was $2.916/Gj higher than that of the LNG Singapore-delivered bunker, according to Platts data. In H2, 2024, Singapore delivered MF 0.5%S was assessed $0.456/Gj lower than Singapore delivered LNG bunker, Platts data showed.

Platts, part of S&P Global Commodity Insights, assessed the Singapore-delivered LNG bunker at $14.492/Gj on March 17, compared with $12.317/Gj for Singapore-delivered marine fuel oil 0.5%.

"Demand will grow this year because more LNG dual-fuel ships will be launched," said an LNG bunker trader based in Singapore.

Sources expect LNG prices to face pressure in the coming months due to increasing supply and seasonal factors.

"In 2025, we forecast LNG supply will grow by 7% year-over-year from a combination of new projects coming online and existing and commissioning projects ramping up," analysts said in an S&P Global Commodity Insights report on March 11.

LNG boost

Singapore, the world's largest bunkering port, saw a significant increase in LNG bunker volumes, growing over fourfold year-on-year to 463,948 mt in 2024, as reported by the Maritime Port Authority of Singapore. This surge is partly attributed to lower LNG bunker prices. The port has implemented various initiatives to promote LNG as a marine fuel and is advancing other cleaner shipping options.

In December 2024, the MPA said it had launched an Expression of Interest to explore scalable solutions for sea-based LNG reloading. The aim is to complement existing onshore LNG bunkering storage and jetty capacities and supply e/bio-methane as marine fuel in Singapore.

In China, major bunker suppliers, including Shanghai International Port Group, CNOOC and PetroChina, are expanding LNG bunkering services in ports like Shanghai, Ningbo, Shenzhen, Guangzhou, and Zhoushan. Industry sources indicate that some Chinese bunker suppliers are considering expanding their barge fleets to meet rising demand, with expectations of a 30% increase in LNG bunker demand in China this year.

According to one bunker supplier: "LNG bunker demand in China will increase for sure. I expect it to rise by 30% this year from 2024."

As ports enhance their infrastructure, more shipowners are choosing LNG, as it is a mature alternative and serves as an immediate solution for sustainable shipping. Lloyd's Register reported over 305 LNG-fueled ships ordered in 2024, making up 14% of newbuilding orders. According to March 3 data from DNV, it estimates 871 LNG dual-fueled ships will be in operation or on order in 2025, up from 648 in 2024.

CMA CGM is on track to have more than 150 ships capable of running on alternative marine fuels by 2029, indicating significant growth in dual-fuel capacity for maritime decarbonization. Singapore's Pacific International Lines has ordered about 18 new LNG dual-fuel ships since 2022, including four 14,000 TEU ships and additional ships of various sizes. A.P. Moller-Maersk also announced plans in December 2024 to build 20 LNG dual-fueled containerships.

Benefits abound

LNG bunkering is gaining traction due to its environmental benefits and the slow development of other alternative fuels. Industry sources indicate that the costs of "green ammonia" and methanol are currently too high, and ammonia raises safety concerns due to its toxicity.

Additionally, international shipping regulations are favoring LNG's adoption. "Shipping companies need to comply with FuelEU Maritime and the EU emissions trading system," noted a LNG bunker buyer, which is expected to boost LNG bunker demand in 2025.

Starting January 2025, FuelEU Maritime will apply to EU and non-EU ships over 5,000 gross tonnages, covering all energy used onboard while operating in or between EU ports. The regulation sets requirements for the annual average greenhouse gas intensity of energy used by ships trading within the EU or European Economic Area, mandating a 2% reduction in GHG intensity from 2020 levels during 2025-2029.