Since January 1, 2020, the number of scrubber-fitted ships has nearly doubled from 2,011 ships to 3,935 by March 1, 2021, data from BIMCO shows.
Scrubbers have been a very attractive solution for meeting the IMO 2020 regulation on cutting the sulphur content in marine fuel, especially for bigger vessels. Payback times from scrubber investments were said to be between 12 and 18 months.
Among the main shipping sectors, 15.9% of all containerships (28.7% in TEU), 11.4% of all dry bulkers (22.7% in DWT), 24.5% of all crude oil tankers (29.9% in DWT) and 4.2% of all oil product tankers (13.4% in DWT) are now fitted with a scrubber to remove the sulphureous oxides from the exhaust gasses, BIMCO said.
“There is a clear tendency that it is the large ships that burn most bunkers which have been preferred for scrubber installations. But it goes for all: as voyage costs are lowered, earnings are higher,” argues Peter Sand, BIMCO’s Chief Shipping Analyst.
As the lion’s share of the world fleet replaced high-sulphur fuel oil (HSFO) with low-sulphur fuel oil (LFSO) as a mean of propulsion to be compliant with the IMO 2020 global sulphur cap which came into force on 1 January 2020, overall bunker sales rose in the world’s by far largest bunkering hub: Singapore.
Total bunker sale volumes grew by 5% in 2020 and have continued to climb in the first two months of 2021 (+2.7% y/y).
A quarter of total bunker sales in February 2021 was HSFO, a share that has only risen since January 2020, when no more than 17% of sales were fuel oil for ships with a scrubber installed.
From the get-go, the choice between LSFOs and scrubbers was all about the bunker price spread. As 2021 arrived and the crazy 2020 was nearing an end, the next normal seemed to be in the making.
“The lowest price spread can be found on the US west coast while the largest spread can be found in the Middle East. In between, you have $118 per MT as the most common spread. That’s the price spread you will find in Singapore,” says Sand.
Prior to the implementation of the sulphur regulation, the then-watched MGO-HSFO spread hovered around $200 per MT, but it was clear that a new and lower spread would settle one point. As the ‘new standard’ LSFO is now established, the pricing of the product also seems to have arrived at the next normal.
“As the bunker price spread now seems to have found a steady level slightly above $ 100 per MT, ship owners and investors are increasingly likely to order new ships with a scrubber preinstalled today, when compared to the sub-100 dollar spread of last year,” Sand concludes.
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