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During a Q2 results presentation last Friday, Wartsila CEO Jaako Eskola said: \u201cToday 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.\u201d<\/p>\n
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Meanwhile, Alphaliner reported that, to date, scrubber retrofitting on 465 containerships had been completed.<\/p>\n
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Another 105 newbuild vessels, with a capacity of 900,000 teu, had the technology installed during construction, taking the scrubber-fitted fleet to 23.5% of the containerships in service, in terms of capacity.<\/p>\n
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The consultant said the number of vessels currently undergoing scrubber installation had \u201cfallen sharply\u201d, to just 52, for 500,000 teu, compared with a peak of 117 ships, for 1.12m teu, in March.<\/p>\n
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The price premium for legally compliant low-sulphur fuel oil (LSFO) over heavy fuel oil (HFO), consumed by most ships prior to 1 January has fallen to just $50 a ton, from more than $200 a ton at the beginning of the year, making the cost savings of using scrubbers much less attractive to vessel operators, as well as significantly lengthening the return on their investment.<\/p>\n
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Moreover, ships fitted with open loop scrubbers \u2013 the vast majority \u2013 face a lengthening list of ports that ban their operation in their jurisdictions, resulting in vessels being required to switch fuel tanks.<\/p>\n
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\u201cWhile pre Covid-19 spreads of $150-$200 potentially offered a payback period of one to two years, spreads in the $50-$60 per ton range now offer a stretch of four or five years until full payoff,\u201d said Alphaliner.<\/p>\n
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The considerable erosion in the operating cost advantages is a second blow to \u2018scrubber pioneers\u2019 such as MSC and Evergreen, which decided on a strategy of retrofitting for a substantial percentage of their fleet, but suffered lengthy delays to installation at oversubscribed yards in China, leading to expensive chartering of replacement vessels.<\/p>\n
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Nevertheless, all carriers have benefited from the plunge in oil prices since January, with LSFO falling some 40% and HFO, bunkered by vessels fitted with scrubbers, down by about a third.<\/p>\n
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Interestingly, Alphaliner noted that both Maersk and Hapag-Lloyd, carriers generally against the installation of scrubbers, were among the lines that had updated guidance confirming improved results in Q2, compared with the first quarter.<\/p>\n
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Indicating the effect of the cost of bunkers on its bottom line, Maersk\u2019s sensitivity guidance shows that a $100 per ton decline in its net average bunker price could, in theory, translate into a $300m increase in operating income.<\/p>\n
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\u201cMaersk\u2019s bunker costs were $1.4bn in the first quarter, based on an average bunker price of $551 per ton in the period for the group,\u201d said Alphaliner.<\/p>\n
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Bunker prices plunged to a low of just $150 per ton for LSFO at the end of April, meaning that carriers will see the benefit of the rock-bottom fuel costs in Q2 and Q3, given the normal six-week lead time for voyage accounting.<\/p>\n
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