Wärtsilä Scrubber Installations Hit Record High Last Year Despite Narrow Sulfur Spread

Demand for scrubbers has persisted over the past year. Image Credit: Wärtsilä

The effect of a narrower VLSFO-HSFO price spread on scrubber installations last year appears to have been less than expected, with Wärtsilä reporting record sales despite waning profitability of the emissions-cleaning systems.

Wärtsilä's number of scrubber installations was 'record-breaking' in 2020, the company said in an emailed statement on Thursday.

Installations had been expected to slow significantly after the crude collapse a year ago delivered a much narrower price spread between HSFO and VLSFO, a key measure of the savings to be made by investing in the technology.

At Rotterdam the VLSFO-HSFO price spread went from $298/mt at the end of 2019 to as little as $26.50/mt in April 2020, according to Ship & Bunker pricing, while a spread of at least $100/mt is thought to be needed to make installing the systems look attractive.

The price spread has widened again this year, reaching $107/mt at the Dutch hub on Wednesday.

In Thursday's statement Wärtsilä noted a sale to Japan Marine United to install a 25MW scrubber on a new VLCC for delivery next year.

"We were delighted to end the record-breaking last year with this order for a scrubber on a newbuild VLCC being built by our friends and partners at JMU," Scott Oh, director of Wärtsilä Exhaust Treatment Asia, said in the statement.

"To achieve continued sustained orders globally, despite the challenges caused by the COVID-19 pandemic, is testament to the commitment of our teams and partners.

"This installation is a clear indication of how important scrubbers are becoming for newbuild vessels, as they aim to keep up with shipping's tightening environmental regulatory landscape.

"We are confident that the industry understands both the power of exhaust gas cleaning technologies as compliance solutions for today, but also to meet a range of challenges beyond sulphur."