- Scorpio Bulkers is assuming a price spread of $250 per tonne between high and low sulphur fuel once the IMO 2020 limit is in force.
- It plans to install scrubbers on all the vessels in its fleet in 2019 and 2020 at an estimated total cost of $127.1m so that it can continue to burn high sulphur fuel .
- Scorpio’s assumed price spread is significantly higher than early assessment of a spread.
Scorpio Bulkers, is assuming a price spread of $250 per tonne between high and low sulphur fuel once the limit is in force, reports SeaTrade Maritime News.
Future Plans for Scorpio Bulkers
Scorpio Bulkers, along with sister company Scorpio Tankers, has taken a major bet on scrubbers to comply with the IMO’s 2020 low sulphur regulations. It plans to install scrubbers on all the vessels in its fleet in 2019 and 2020 at an estimated total cost of $127.1m so that it can continue to burn high sulphur fuel (HFO) to comply with the 0.5% global sulphur cap rather than buying more expensive compliant low sulphur fuel oil.
Why Scrubbers?
When asked in full year earnings call, what it expected the price spread to be between high and low sulphur fuel come 2020 Scorpio Bulkers chairman and ceo Emanuele Lauro said that, they were assuming a difference of $250 per tonne. Scorpio’s assumed price spread is significantly higher than early assessment of a spread of $40 to a high of $104 per metric tonne (pmt), according to data drawn from Platts and Taiwan’s oil refiner CPC Corp, earlier this month.
What changed their mind?
Scorpio had previously described fitting scrubbers as a ‘commercial opportunity to burn cheap fuel.’ However, speaking on Monday Lauro said there were multiple factors to the decision to fit scrubbers. “We did a rather comprehensive assessment of the number of things including the risk of regulatory changes, risk to the technology movement of the spread on fuel availability, compatibility all and this is where we came out. We’re very confident and still quite comfortable with our decision,” Lauro said.
On the move by a number of countries and ports to ban the use of open-loop scrubbers in port or coastal waters the company said it would have little impact on the economics of using exhaust gas cleaning systems. Cameron Mackey, coo of Scorpio Bulkers said that, it is not material from a voyage consumption point of view and therefore not really material from the point of view of scrubber economics or return characteristic.
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Source: Sea Trade Maritime News
