Alternative Marine Fuels: Monthly market indicators

Bunker Fuels

Shipowners that invested in scrubbers post-IMO-2020 have been presented with marginally better returns on investment in recent weeks as HSFO prices have fallen from one-year highs.

The Hi-5 spread -- or premium of 0.5%S FOB Rotterdam barges over 3.5%S product -- slumped to a record low of $20/mt Aug. 8, but has since recovered to $44.75/mt Aug. 30.

The premium for VLSFO still remains well below the $228.25/mt assessed last year, however, and falls short of the approximate $100/mt spread necessary for a two-three-year scrubber payback time.

The recent narrowing in differentials between the different quality fuel grades has been spurred by global sour crude tightness in the wake of OPEC+ supply cuts and more limited access to heavy Russian barrels, though the end to seasonal summer demand peaks have provided some relief.

Suppliers at the port of Rotterdam noted limited responsiveness to the falling price incentive to continue burning HSFO, however, as shipowners have sought to capitalize on any available discount for scrubber-fitted vessels.

Biofuels

Platts, part of S&P Global Commodity Insights, will launch two new delivered-Rotterdam blended bio-bunkers assessments Oct. 2.

The new delivered-Rotterdam B30 bio-bunkers calculated assessments will reflect a ratio of 70% very-low-sulfur fuel oil based on Platts FOB Rotterdam Marine Fuel 0.5% Barge $/mt assessment (PUMFD00) and 30% based on Platts FAME 0 FOB ARA RED $/mt assessment (AAWGI00) plus barging costs, and 70% VLSFO based on Platts FOB Rotterdam Marine Fuel 0.5% Barge $/mt assessment (PUMFD00) and 30% Platts UCOME FOB ARA RED /mt assessment (AUMEB00) converted to $/mt, plus barging costs.

Ammonia

Norwegian ship manager OSM Thome has partnered with Pherousa Green Shipping to construct and operate Ultramax dry bulk carriers with ammonia cracking technology in a bid to achieve zero-emission copper shipping, the companies said Aug. 22.

In a joint statement, Pherousa Green Shipping, an Oslo-based company established earlier this year, said it plans to order six 63,000 dwt ships powered by hydrogen produced on board from ammonia via cracking.

LNG

Singapore-headquartered Eastern Pacific Shipping has wrapped up its first US LNG bunkering operation after its dual fuel LNG Suezmax tanker, the Starway, bunkered at the Galveston offshore anchorage on Aug. 24. The tanker received 3,300 cu m of LNG via ship-to-ship transfer operation from Avenir Achievement, a 20,000 cu m LNG bunkering vessel chartered by Shell, EPS said in a social media post on Aug. 29. Starway also currently trades in the spot market.

Platts launched a new daily LNG bunker fuel price assessment, reflecting the value of LNG used as a marine fuel in Barcelona, Spain, effective Aug. 16. The new assessment reflects the prevailing spot price of LNG bunkers tradeable in Barcelona, though loadings in other ports within the Iberian Peninsula and southern France may also be considered and normalized to a Barcelona basis.

Platts is proposing to start publishing a daily LNG bunker fuel price assessment, reflecting the value of LNG used as a marine fuel in Shanghai, China, effective Oct. 2.

The assessment would reflect the prevailing spot price of LNG bunkers transacted in Shanghai. Deliveries in other ports within China would also be considered and may be normalized to the above-mentioned basis.

Shipping

Cargill has completed the installation of large wind sails on one of its chartered dry bulk carriers, the companies involved said Aug. 21, as the US-based trading house continues to seek and harness renewable energy to cut fuel consumption and greenhouse gas emissions.

The 80,962 dwt Pyxis Ocean -- chartered by Mitsubishi Corp. to Cargill -- has been fitted with two WindWings designed by BAR Technologies, with each of the equipment likely to reduce fuel consumption by 1.5 mt/d on average, according to a joint statement.

Finnish technology firm Wartsilla will design the world's largest fully-electric marine propulsion system with Corvus Energy's battery for a ro-pax ferry under construction in Australia, the companies said Aug. 24, as more ship operators seek low-carbon energy to cut greenhouse gas emissions. According to company statements, the energy storage system will come with a capacity of over 40 MWh, at least four times larger than any marine battery that has been constructed.

The system is scheduled for delivery at the end of 2024 for installation on board a ship being built by Incat Tasmania for South American ferry operator Buquebus.