Whether an owner will ever achieve full payback for a scrubber is now debatable with the price gap between high and low sulphur fuel staying stubbornly narrow all year, coupled with higher maintenance costs for these exhaust gas cleaning systems than originally estimated.
Peter Sand, chief shipping economist at international shipowning organisation BIMCO, has crunched the numbers and yesterday suggested the narrowing of the price gap between high and low sulphur fuels means that the spot market earnings differential for a capesize bulker – scrubber versus no scrubber – on January 3 this year compared to August 7 has declined from $7,626 a day to just $1,095 a day.
The bunker price spread has remained below $70 per tonne for most of the year, far below the $150 differential cited last year as the outlier in terms of payback times.
“The debate on scrubber economics is all but gone now,” Sand said yesterday.
What was extremely misleading from the beginning is that the scrubber fitting was a paper exercise
Last month, Stamatis Tsantanis, CEO at capesize owner Seanergy Maritime, hit out how shipping had been hoodwinked by ill thought out scrubber economics.
Speaking to Noble Capital Markets, Tsantanis said: “What was extremely misleading from the beginning is that the scrubber fitting was a paper exercise – you just pushed a certain button and you would lock in to certain spreads and you would make a certain profit. That is totally not the case.”
The Greek owner said the payback period for a scrubber had been anticipated at 6 to 12 months, but the CEO said the timetable is now closer to five years.
The changed fortunes have also manifested among scrubber manufacturers. During a Q2 results presentation last month, Wärtsilä CEO Jaako Eskola said: “Today the fuel [price] spread between high sulphur and low sulphur fuel is so low that the retrofitting order intake in scrubbers is pretty much almost zero.” Wärtsilä is one of the world’s largest scrubber manufacturers.
The issue of payback times for this equipment is clouded further by maintenance costs.
At a Maritime CEO Forum from 2018, Bjørn Højgaard, CEO of shipmanagement giant Anglo-Eastern, warned that scrubbers are sensitive pieces of equipment sitting in the hostile, hot and acidy environment of a ship’s funnel.
“There are going to be plenty more maintenance issues than people expect,” Højgaard told the exclusive shipowner gathering. He went on to recount how one car carrier owner he knows had budgeted $10,000 a year in scrubber maintenance per ship. In the first year alone that owner had to spend $100,000 in scrubber maintenance per ship.
Norwegian P&I club Gard stated in a note to clients last October that it has seen a few incidents where within 10-15 months of an open-loop scrubber being installed, corrosion of an overboard distance piece or in its immediate vicinity has resulted in water ingress into areas such as the engine room, ballast tanks and cargo holds.