Scrubber orders have been thin on the ground despite a widening discount for HSFO. Image Credit: Wärtsilä
Scrubber orders remain low despite a wide VLSFO-HSFO price spread as healthy ship earnings make retrofits less attractive, according to engineering company Wärtsilä.
The firm's Marine Systems unit saw net sales drop by 19% on the year to EUR 654 million ($730 million) last year, it said in an annual results statement on Friday. The unit covers the firm's activities in scrubbers, gas solutions, marine electrical systems and shaft line solutions.
The fall was "as a consequence of decreased scrubber volumes and lower newbuild scrubber margins," the company said in the statement.
"The interest in scrubber installations continues to be mostly driven by newbuilds, with orders recorded for 231 vessels globally in 2021.
"Scrubber retrofitting activity continued to be muted."
That lethargy in scrubber retrofits can be explained by improved freight markets, the company added.
"High earnings and tonnage demand have led to postponements of activities that require dry-docking, such as scrubber retrofits," it said.
But for those shipowners with scrubbers already installed, last year delivered significant cost savings compared to the rest of the global fleet. The average VLSFO-HSFO price spread -- a measure of how much ships with scrubbers save on fuel bills -- widened by 21.7% to $112/mt last year, according to Ship & Bunker's G20 Index of prices at 20 leading bunkering hubs.
The spread ended the year at a 2021 high of $153/mt, having started it at $79.50/mt, and it has not narrowed significantly since then. A spread of at least $100/mt is considered a key psychological level at which scrubber investments start to receive more interest from the shipping industry.