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Scrubbers set to make big savings as IMO 2020 takes effect

SCRUBBERS look like cost-saving winners for the moment as IMO 2020 takes effect this week among the choices of compliant fuel available, reports Colchester's Seatrade Maritime News

03 January 2020 - 19:00

SCRUBBERS look like cost-saving winners for the moment as IMO 2020 takes effect this week among the choices of compliant fuel available, reports Colchester's Seatrade Maritime News. The global 0.5 per cent low sulphur cap for marine fuel, or IMO 2020 finds most owners complying with very low sulphur fuel oils (VLFSO) or gas oil.

'Out of the total merchant fleet, about one per cent is powered by LNG. In addition, several thousand vessels worldwide have had scrubbers installed (and installations are expected to continue well into 2020,' brokers Poten & Partners commented in their weekly report.



Many larger owners have locked in compliant fuel stocks to reduce their exposure to a potentially volatile market pricewise for such fuels.



While major shortages of compliant fuel do not appear to be expected those buying without contracts could find themselves paying high prices. 'However, in the short term, disruptions are likely and current pricing signals indicate that if a shipowner needs to buy compliant fuel on the spot market, he will need to pay premium prices,' said the Poten note.



Meanwhile falling high sulphur fuel oil (HSFO) prices mean a widening fuel spread which is set to benefit owners who have gambled investment millions in installing scrubbers on their vessels.



'That IMO 2020 is already well underway can be seen from recent movements in bunker prices and using MSI's latest forecasts at current price spread levels, we expect substantial premia on scrubber-fitted vessel earnings next year,' said Adam Kent, managing director of Maritime Strategies International (MSI).



'So far price dynamics are adhering to our view that there won't be a huge price spike in low-sulphur fuel, but rather the spread will be driven by falling HSFO prices.'



Although MSI put the price between HSFO and VLSFO at around $200 per tonne, significantly lower than a near $300 spread per tonne quoted by Poten for Rotterdam, these level will still give handsome returns for owners.



A 13,000-TEUer, consuming 100 tonnes of fuel per day would saved $17,400 per day at $200 tonne price differential, and $26,000 per day savings at $300 per tonne average across a year.


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