The Chief Executive Officer of Antwerp-based crude oil tanker firm Euronav believes any market advantage of heavy fuel oil (HFO) prices which scrubbers offer for shipowners to erode away by 2023.
“When you look at the fuel spread itself nobody is quite sure how hard and far HFO will fall, but nearly everybody say it will bounce back and you’ll see that in things like the BP statistical review where they saw a huge bounce back in demand for HFO on the basis of the price would drop so far and so fast that there would be an immediate update in additional tranche of scrubbers, which would takeaway any discounts on HFO,” said Paddy Rodgers in a recent earnings call as quoted by Seeking Alpha.
He noted refiners are preparing to produce compliant fuel due to IMO 2020.
“And if they take enough volume then, of course, there will be no premium to it and we've already seeing trades downward and in thing between $40 and $100, which would mean the payback time at $100 of about four years on a scrubber and significantly if it’s only $40 this premium over HFO, it could be 14 to 15 years to get your money back, let alone make the profit,” adds Rodgers.
“And then on the general mood music around it, when we talked to all majors, they always said to us the scrubbers is a story that will affect the market 2020, 2021, 2022, by 2023 it will be all over.”
Euronav in late October 2018 released a statement addressing three areas of concern when assessing scrubber installation on its fleet.
Photo credit: Euronav
Published: 29 January, 2019
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