- Q1 saw record low bunker spread and scrubber premium sliding.
- Bunker price differential to end the quarter at $79/mt (Rotterdam prices on March 31st).
- Scrubber premium declined sharply over the course of the first 3 months of the year and ended the quarter at $2,699 for capesizes and $1,319 for panamaxes.
- Scrubber installations planned for the balance of 2020, will increase the total number of scrubber ships to about 3,500 by the end of the year.
- Coronavirus outbreak has shrunk bunker spread and shut shipyards.
According to a recent article published in Manifold Times, the first quarter of the IMO 2020 implementation saw record low bunker fuel spread and slide in scrubber premium.
Oil price collapse
As a result of Saudi Arabia-Russia oil supply war, crude oil and bunker prices literally collapsed over the last weeks.
Added to that, supply logistics for the compliant fuel improved while the incoming scrubber retrofitted vessels pressured the HSFO price further.
These led the bunker price differential to end the quarter at $79/mt (Rotterdam prices on March 31st).
Scrubber premium
As scrubber premium is tied to the VLSFO/HSFO spread, scrubber economics followed suit with
- the premium declining sharply over the course of the first 3 months of the year and
- ending the quarter at $2,699 for capesizes and $1,319 for panamaxes.
Scrubber-fitted vessels profit
Although scrubber-fitted vessels have enjoyed little benefit till now, the investment is still generating some much needed profit.
Especially so for capesizes which have been running below OPEX for the better part of Q1.
Having said that, the scrubber installation has been a considerable investment and due to this diminished premium, its ROI (Return on Investment) is now pushed further away.
Number of scrubber fitted ships
Estimates point to about 1,000 scrubber installations (referring to all types of vessels) planned for the balance of 2020, which will increase the total number of scrubber ships to about 3,500 by the end of the year.
Delay due to coronavirus outbreak
However, a few owners are already seen postponing or even, when possible, cancelling scheduled installations. This comes on the back of the shrunken bunker spread as well as the coronavirus outbreak which had shipyards shut. Therefore, that estimate can very well change as the year progresses.
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Source: Manifold Times
