Skip to main content

SCRUBBER-FITTED SHIPS PROVE EARLY WINNERS IN 2020 FUEL TRANSITION

Sunday, December 29, 2019 

New functionality added to research consultancy Maritime Strategies International (MSI) Horizon data platform, enabling users to calculate the earnings premium for vessels fitted with exhaust gas cleaning systems (scrubbers) and using high sulphur fuel oil and the subsequent impact on asset values, shows that current economics indicate that the scrubber solution is well placed to take advantage of currently low prices for residual fuels.

Using MSI’s Forecast Marine eValuator (FMV), users can apply the spread between high sulphur fuel oil and 0.5% sulphur fuel oil by vessel type and see the effect this has on vessel earnings.

“That IMO2020 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 Dr Adam Kent, MSI MD. "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.”

On an annual average basis, the MSI hi-lo spread projections are very close to its previous predictions, with a nominal spread between benchmarks of just over $200/tonne between HSFO and VLSFO and over $300/tonne between HSFO and MGO.

MSI’s most recent quarterly reports suggest that for a 13,000 TEU containership consuming approximately 100 tonnes per day of fuel, a $200 per tonne price spread between 0.5% sulphur compliant fuel and high sulphur fuel would yield average cost savings over a year of approximately $17,400/day, whilst a $300 per tonne spread would yield savings close to $26,000/day.

For a Capesize bulker consuming approximately 43 tonnes of fuel per day, a $200/tonne price spread between 0.5% sulphur compliant fuel and high sulphur fuel would yield cost savings of approximately $6,500/day, whilst a $300 per tonne spread would yield savings close to $9,700/day.

For a VLCC consuming approximately 85 tonnes per day of fuel, a $200/tonne price spread between 0.5% sulphur compliant fuel and high sulphur fuel would yield cost savings of approximately $15,000/day, whilst a $300 per tonne spread would yield savings close to $23,000/day.

“Our analysis shows the main dynamic in the second half of 2019 to be the recent relative decline in fuel oil prices and as a result there are large regional disparities in bunker prices,” said Kent. “Our spread projections may appear conservative given the upheaval in the markets, but they reflect annual average prices. The first half of 2020 is likely to be more volatile and given the rapid decline in HSFO prices, MSI expects more exaggerated price differentials in the first quarter of 2020.”

Reader Comments (0)

There are currently no comments on this article. Why not be the first and leave your thoughts below.

Leave Your Comment

Please keep your comment on topic, any inappropriate comments may be removed.

Return to index

Web Analytics