Rotterdam HSFO Demand Overtakes VLSFO for First Time Since IMO 2020

For every previous quarter since Q4 2019, just before the IMO imposed a global 0.50% sulfur limit on bunker fuels, VLSFO took up the most demand. Image Credit: Ship & Bunker / Data Credit: Port of Rotterdam

For the first time since the IMO 2020 transition, HSFO is now once again the dominant fuel grade at Europe's largest bunkering port.

HSFO sales overtook VLSFO in Rotterdam's first-quarter sales, according to the latest bunker demand figures from the port authority. For every previous quarter since Q4 2019, just before the IMO imposed a global 0.50% sulfur limit on bunker fuels, VLSFO took up the most demand.

The change may be related to diversions from the Red Sea since late last year because of attacks on commercial shipping in the area, a local trading source told Ship & Bunker. Container ships are more likely to have scrubbers installed, and these ships now need to pick up greater quantities of fuel at the start and end of their voyages to cover longer voyages around Africa, travelling at greater and less fuel-efficient speeds.

"It's down to faster sailing, higher consumption and an uptick in scrubbers," the source said.

"We only saw the pick-up in March; January and February actually had been slow, as Singapore was a cheaper alternative."

"There's increased scrubber uptake in general and the Red Sea diversions," a second local source said.

"The price spread between VLSFO and HSFO has had a steady increasing period where it is economically worthwhile for investment in the technology."

HSFO's average discount to VLSFO -- a key measure of the profitability of scrubbers -- stood at $118.50/mt at Rotterdam in the first quarter, according to Ship & Bunker data, up from $88.50/mt the previous quarter.

Total conventional and biofuel sales reached 2.322 million mt in the first three months of the year, according to data published on Tuesday by the Port of Rotterdam. The total was up by 11.4% from the previous quarter, but down by 11.8% from Q1 2023.

Conventional VLSFO sales lost 30.8% on the year to 680,782 mt in Q1, HSFO rose by 1% to 818,028 mt, ULSFO dropped by 20.1% to 176,797 mt, MGO advanced by 1.7% to 262,496 mt and MDO sank by 42.5% to 120,913 mt. Biofuel blend sales surged by 76% to 262,634 mt.

HSFO's share of total conventional and biofuel demand was 35.2%, up from 30.8% a year earlier. Since the start of 2020 its average share has been 31.4%.

At the same time, LNG bunker sales jumped by 150% on the year to 215,247 m3 in Q1, a new record high.