There seems to be an increase in interest for ships on adding a cleaning systems to their smokestacks. This means that the vessels will still burn a sizable amount of fuel oil once new sulfur regulations for the fuel go into effect, said a Vienna-based consultancy JBC Energy on Tuesday.
Not gone yet – HSFO
To combat air pollution from the shipping industry, the IMO enacted rules that has reduced the sulfur content of the bunker fuel to 0.5 percent from the present 3.5 percent by January 2020.
Scrubbers installed on ships are expected to burn 600,000 barrels per day (bpd) of high-sulfur fuel oil (HSFO) in 2020, even after the IMO rules will come into effect, says JBC said.
Plates turn around
Ships without scrubbers would have to burn costlier low-sulfur fuels such as marine gas oil or ultra-low-sulfur fuel oil to comply with the clean air rules.
The companies that once dismissed scrubbers, like German shipping company Hapag-Lloyd, are reconsidering their position in light of studies praising scrubber economics. They believe that scrubbers have improved and is seen as an optimistic partner to comply with IMO rules.
Although, in March, Hapag-Lloyd’s chief executive had said installing scrubbers to remove sulfur did not appear to be the company’s preferred option.
Fuel Rates to shrink
“Since then, data from scrubber industry group EGCSA has underpinned this position with the number of vessels with scrubbers installed or on order put at 983 as of the start of June,” said JBC.
“The uptick in scrubber interest and hence HSFO appears to have been noticed in the HSFO forward markets with the backwardated spread between the August 2018 contract month and January 2020 having narrowed by $4 per barrel since the start of July,’ said JBC citing data from oil brokers PVM.”
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Source: Reuters
