The spread of marine biodiesel with 100pc advanced fatty acid methyl ester (Fame) in ARA on a dob basis to conventional marine gasoil (MGO) flipped to a $70.28/t discount in the week to 15 September for the first time since January.

Conventional MGO prices have firmed in ARA, averaging $964/t in the week to 15 September, the strongest weekly level since November 2022. MGO levels firmed on the back of tightening gasoil supply in northwest Europe, resulting in distillate blendstocks getting redirected towards road-fuel diesel grades commanding a greater premium and away from MGO supply. Market participants also noted tighter availability of conventional MGO in recent trading sessions in line with tighter supply of blending components.

B100 levels slipped on lacklustre demand for the product, according to market participants, who had previously mentioned that the price of B100 weighed on bunker fuel demand compared with conventional bunker fuels and B30 marine biodiesel blends. This may now change if B100 continues to price at a discount to MGO.

Further, the EU emissions trading scheme (ETS) is scheduled to commence next year, which may provide an additional incentive for shipowners to switch to B100. Argus estimates that a B100 blend comprising 100pc advanced fame will not be subject to ETS costs, as ETS emissions will be calculated on a tank to wake basis.

Shipowners running vessels with scrubbers may still opt to burn high-sulphur fuel oil (HSFO) and pay for the CO2 costs, according to market participants. B100 commanded a premium of $36.29/t against dob HSFO when CO2 costs are factored on the week to 15 September, according to Argus calculations. But B100 also flipped to a discount of $2/t to dob HSFO with CO2 costs on 15 September for the first time since April. Further, HSFO availability has been tight in northwest Europe in recent sessions, resulting in dob HSFO levels firming to $603/t on 15 September - the highest since June 2022. Shipowners with vessels that are not fitted with scrubbers are unable to utilise HSFO or even VLSFO in Emission Control Areas (ECA), but are able to burn B100.