The quickly increasing spread between HSFO and VLSFO bunkers, in the context of a “more normalized supply and demand dynamics could usher in a second wave of scrubber uptake in the shipping industry, writes Martyn Lasek, managing director at Ship and Bunker in an extensive January 26 industry analysis.
He quotes leading scrubbers manufacturers, including Nick Confuorto, President and COO of CR Ocean Engineering.
We repost some excerpts. The full article can be found on this link.
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Manufacturers of marine scrubber technology believe a second wave of scrubber uptake is on the horizon thanks to a rapidly widening spread between HSFO and VLSFO bunkers, along with a return to more normalized supply and demand dynamics.
There are plenty of signs to indicate they might be right.
After being largely shunned during the early part of the IMO 2020 run in, much to the bemusement of many an analyst who considered the HSFO + scrubber proposition a “slam dunk” in economic terms, the well-documented first major wave of scrubber uptake began in mid-2018.
As most readers will know the collapse of oil prices in 2020 and the coronavirus pandemic’s impact on the global economy has meant that for much of 2020 the expected savings afforded by scrubbers were not fully realized.
This is not to say scrubber-equipped vessels did not enjoy savings as they certainly paid less for fuel last year, as indicated by data from Ship & Bunker’s Global 20 Ports Average that tracks the average price of bunkers in 20 key bunkering hubs responsible for a significant proportion of global volume.
Owners and analysts had widely expected the spread to be around $200/mt. In 2020 Q1 the VLSFO / HSFO spread averaged $188.40/mt and $91.62/mt for 2020 as a whole. Owners also reported other financial benefits such as their scrubber equipped vessels commanding higher charter rates.
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“We have been tracking the price differential and believe it is coming back with much strength,” Nick Confuorto, President & COO at scrubber manufacturer CR Ocean Engineering, told Ship & Bunker.
“Unfortunately the shipowners are still not totally convinced that the differential will go to the previous levels or above. That will change where they experience first hand the increases. Scrubbers are saving money for the shipowners who had the vision to install them in the first wave. Most will wait for the second wave that is about to begin.”
“The CO2 savings could be in the range of 15- 20% based on independent studies. That is significant,” says Confuorto. “The higher the pressure on CO2 reduction the better for the scrubbers. Any other carbon free technology is much longer in the future.”
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One final thought readers should keep in mind for scrubbers is to remember that the rules governing future ship emissions have not yet been set and they will have to tighten in the years ahead. While the focus is currently on decarbonization, emissions of NOx and PM are likely to be regulated in the nearer term.
While we still have oil burning ships on the water, then, we may well reach a point where it becomes untenable to operate such tonnage without a scrubber.
