FINNISH technology group Wartsila says container and dry bulk ship owners are cancelling scrubber
retrofits and installations in a move designed to cut costs. Alphatanker
predicts a "flood of cancellations" as cost cutting and the erosion of
marine fuel oil premiums render the sulphur abatement technology
redundant.
The price of 0.5 per cent very low
sulphur fuel oil now used by some 70 per cent of the international
global fleet dived by 278 per cent in Singapore since the start of this
year when it was as high as US$653.75 per tonne, according assessments
compiled by price reporting agency Argus Media, reported London's
Lloyd's List.
"Persistent low marine fuel prices will hit the fortunes of shipowners
who have invested heavily to have their vessels equipped with
scrubbers," said Alphatanker, a research division of Paris-based brokers
BRS.
The difference in price between compliant very low sulphur fuel oil
(VLSFO) and 3.5 per cent high sulphur fuel oil used by vessels with
scrubbers has shrunk to $50 per tonne, from $400 per tonne earlier this
year, according to Alphatanker.
That has reduced the earnings premium for scrubber-fitted vessels and
extended the payback time for the $2.5 million average investment to
four years rather than four months for the largest vessels that have
retrofitted the technology. Payback time will be even longer for smaller
vessels, given the economies of scale.
"The question is now rightly being raised over whether scrubber
installations will be cancelled," Alphatanker said in its weekly report.
"Installations due to be carried out in Chinese yards were already
being delayed in the wake of Covid-19 and now following stellar returns
for tankers, some owners are reportedly delaying or even, where
possible, cancelling installations.
"Reports suggest that owners of bulkers or liners struggling amid the
global downturn are also cancelling scrubbers as they strive to cut
costs. We fear that this is just the tip of the iceberg and as the
global recession intensifies during the second quarter, this drip of
cancellations could turn into a flood."
Some 2,753 vessels totalling 328.7 million deadweight tonnage (dwt) were
trading and had scrubbers installed, according to the Lloyd's List
Intelligence database at the start of January.
A further 580 newbuildings were to have scrubbers fitted. Some 16.4 per
cent of crude tankers, including one in five very large crude carriers,
and 12.7 per cent of containerships have the technology installed. Dry
bulk scrubber penetration is at 12 per cent.
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