Fuel price spread vindicates scrubber investments: Alphaliner

Fuel price spread vindicates scrubber investments: Alphaliner

Alphaliner reckons liners who have installed scrubbers are poised to cash in on their controversial investments.

Based on the growing price differential between high and low sulphur fuel oil, the container analysts believe exhaust gas cleaning systems are proving to be a smart investment as the price spread between the two fuels has leapt above $200 per tonne this month.

“Current price spreads, if they can be sustained, vindicate some owners’ decisions to install scrubbers on their vessels and thus allow ships fitted with such exhaust cleaning systems to continue using cheaper HFO after January 2020,” Alphaliner stated in its most recent weekly report.

According to Alphaliner data, 57 containerships have already been retrofitted with scrubbers and a further 38 units are currently undergoing retrofitting at shipyards. On top of this, 44 containership newbuildings have been delivered with scrubbers already installed.

Alphaliner estimates that 400,000 teu of shipboard capacity is currently immobilised at repair yards for scrubber retrofitting, sparking a hot charter market for larger boxships.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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2 Comments

  1. Avatar
    Martyn Benson
    August 28, 2019 at 6:02 pm

    Current price spreads IF they can be maintained…….just about the most important IF in a shipping context in recent times. Just as things can go up, they can also come down and the possibility is that the IFO380 price could rise as more effort is placed on LSFO storage and as more refining capacity comes on stream for LSFO, meaning that the LSFO price(s) could fall.
    I wouldn’t be so quick to crow ‘victory’ and, as the world is not only about container ships, there should be some account mentioned of the other sectors which may have a cumulative effect on bunker pricing.
    I know consultants have to make regular pronouncements to keep their fees rolling in but probably better to hold one’s countenance and wait until Q2/2020 before declaring a win for scrubbers.

  2. Avatar
    Matthew Kenney
    August 28, 2019 at 6:49 pm

    At present, it looks likely the spreads will widen if anything, as hedging proliferates and fuel compatibility and availability remains a significant uncertainty. There seems to be evidence that large refineries have been reluctant to assist with an accord on global LSFO compatibility (providing samples to the IBIA etc) in an attempt to protect market share beyond 2020. As long as there are corrosive influences on competition causing bullishness in the LSFO market, HFO will presumably endure as a cheaper option for some time? At least until we are beyond the payback period for most pre-2020 scrubber installs perhaps…