Independent maritime research consultancy Drewry on Thursday (30 May) published an industry update commenting on the commercial gains of scrubbers coming IMO 2020.
Ever since the date of implementation of the regulation on bunker fuel by the IMO was declared, shipowners have been evaluating the pros and cons of fitting scrubbers.
The two main questions haunting owners are:
However, the recent forecast by the International Energy Agency (IEA) eases the concerns of shipowners regarding the availability of HSFO. Despite the fact that a major chunk of the existing HSFO demand will shift towards the compliant fuel after the implementation of the new regulation, demand will still be strong enough to induce bunker suppliers at major ports to continue to offer HSFO.
According to the IEA, demand for HSFO will decline from 3.5 mbpd in 2019 to 1.4 mbpd in 2020, and will further decline slightly to 1.1 mbpd by 2022 with the improvement in VLSFO supply (3.5% sulphur). Nevertheless, during 2022-24, HSFO demand will be surprisingly resilient at around 1.1 mbpd, as vessels fitted with scrubbers will support demand. According to the agency, more than 5,000 vessels will be fitted with scrubbers by end-2024.
Currently, about 11% of the global fleet (in terms of GT) is either scrubber-fitted or pending retrofit. At the same time, about one-third of the vessels in the orderbook will be fitted with scrubbers. The share of scrubber-fitted vessels (including pending retrofit) in large vessels, especially tankers and bulk carriers is high, due to their higher bunker consumption. While the share is more than 20% for large tankers (VLCCs and Suezmaxes), it is above 15% for Capesize bulkers, which suggests that bunker suppliers at ports handling these large bulk vessels will continue to supply HSFO.
Although there is still high uncertainty regarding the possible premium of LSFO over HSFO, the expected tight supply of the compliant fuels suggests that the premium will be strong enough to recover the cost of scrubbers within the first two years.
We expect the average price premium of LSFO over HSFO to be around $240 per tonne in 2020, which will gradually decline to close to $80 per tonne by 2023 once the LSFO supply improves. As the premium in the price of compliant fuel will narrow significantly after the first two years, the business case for retrofitting scrubbers will disappear in later years.
Based on our bunker price forecast, a scrubber-fitted non-eco VLCC will earn around $12,500pd more than a non-eco VLCC without a scrubber in 2020. However, the earnings premium of scrubber-fitted VLCCs will decline to around $4,000 pd by 2023.
As LSFO will continue to hold the price premium of around $75 per tonne over HSFO even beyond 2023, scrubber-fitted vessels will continue to earn more than non-eco vessels without scrubbers. Moreover, non-eco scrubber-fitted vessels will be able to compete with modern eco-vessels (around 15% more fuel efficient) even beyond 2023.
Published: 31 May, 2019
IBIA Asia, ABIS, sources from Singapore’s bunkering and surveying companies, and an industry veteran share with Manifold Times the issues expected from MPA’s latest Covid-19 measures.
The top three positive movers in the 2020 bunker supplier list are Hong Lam Fuels Pte Ltd (+13); Chevron Singapore Pte Ltd (+12); and SK Energy International (+8), according to MPA list.
‘We will operate in the Singapore bunkering market from the Tokyo, with support from local staff at Sumitomo Corporation Singapore,’ source tells Manifold Times.
Changes include abolishing advance declaration of bunkers as dangerous cargo, reducing pilotage fees on vessels receiving bunkers, and a ‘whitelist’ system for bunker tankers.
Claim relates to deliveries of MGO to the vessels Pacific Diligence, Pacific Valkyrie, Pacific Defiance, Crest Alpha 1, and Pacific Warlock between March 2020 to April 2020.
3,490 mt of LSFO from Itochu Enex was lifted at Universal Terminal; the same bunker stem was bought by Global Marine Logistics and delivered by bunker tanker Juma to receiving vessel Kirana Nawa.
15 Jan 2021