In order to comply with sulphur emission limitations, ships must now utilise ultra- or low-sulfur fuel (such as ULSFO or VLSFO). Ships can still utilise heavy fuel oil (HFO), which is less expensive if they install a scrubber. However, it has shown that the price premium for VLSFO is not as great as first thought, as reported by BIMCO.
VLSFO price premium
The price premium for VLSFO on December 31, 2019, the day before the new IMO regulation went into effect, averaged $ 347/tonne at six of the biggest bunkering ports in the globe. The premium has since averaged USD 149 per tonne. Throughout much of 2020, it was as low as USD 50 per tonne, and in June and July of 2022, it was as high as USD 400 per tonne.
Investment in scrubber
The investment in a scrubber is more alluring because the payback period is shorter the larger the VLSFO premium. Owners may have been deterred from installing scrubbers, particularly on smaller ships with lower bunker use and lesser savings as a result, due to the lower-than-expected VLSFO premium.
In actuality, the average dry bulk, container, and tanker ship have a deadweight capacity of 140,845 tonnes, compared to 51,743 tonnes for vessels without a scrubber. Thus, 29% of the deadweight capacity is represented by 13% of the dry bulk, container, and tanker ships with scrubbers. The fleet of oil tankers has the greatest installation rate, with scrubbers installed on 32% of the ships and 38% of the deadweight capacity.
Drop in scrubber deadweight
The number of ships with scrubbers is likely to rise in the upcoming years as 17% of the dry bulk, container, and tanker ships on the order books of the shipyards are anticipated to be equipped with them. However, that only makes up 24% of the order book’s deadweight capacity, thus the scrubber’s deadweight percentage might drop.
Scrubbers may become less frequently used over time as decarbonization initiatives lead to a rise in the usage of alternative fuels that are sulphur compliant.
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Source: BIMCO
