Latest data from Ship&Bunker shows the average price spread between high and low sulphur fuel oil at the world’s 20 largest bunkering hubs stands at just $86 per tonne, putting scrubber investments into sharp focus.
In some ports the figures are even more narrow with Fujairah having a price spread yesterday of just $64 per tonne while the gap in prices for shipping’s top two fuels at Rotterdam yesterday was $62 per tonne.
In terms of general global patterns the price spread tends to be higher in the western hemisphere at the moment.
Pre-coronavirus, shipowners had been expecting the issues brought about the global sulphur cap – price spread, fuel compatibility and availability – to dominate daily operations in the first quarter of the year. However, after peaking on January 7, the price spread, known among bunker players as the Hi5, has narrowed fast by more than $220 per tonne as a global average to the point where calculations for scrubber payback times have had to be drastically reworked.
Speaking with sister title, Splash Extra last month, Rob Aarvold, general manager at Singapore-based owner Swire Bulk, said: “With the jump in the spread between VLSFO and HSFO to close to $350 per metric shortly after the implementation of the new IMO 2020 regulations on January 1 2020 all discussions centred around the validation of the scrubber strategy and the revised payback calculation. Subsequently this spread has collapsed to nearly $150 in Rotterdam, a pricing point that most advocates for the installation of scrubbers used as an outlier in the justification case.”
In practice the real spread is even more opaque given that most regular HSFO consumers are buying under contract, so with less spot activity and limited open market availability the spread remains somewhat theoretical and this is before incorporating delivery costs including waiting time for barge availability.