SIBCON 2024: Some Shipping Firms Now Comfortable With $80/MT Scrubber Spread

Jørgensen appeared in a panel session at Sibcon on Wednesday. Image Credit: Ship & Bunker

Shipping firms with scrubber-equipped tonnage are increasingly comfortable with narrower price spreads between VLSFO and HSFO, according to bulker company Oldendorff Carriers.

Scrubber installations have been rolled out rapidly since the IMO 2020 transition, allowing owners to buy cheaper HSFO rather than VLSFO in return for the necessary capital expenditure on the emissions-cleaning systems.

The price spread between VLSFO and HSFO is the key measure of whether the systems are worth paying for. While historically owners were looking for a spread of $100/mt or $150/mt, some are now comfortable with one as low as $80/mt, Jens Maul Jørgensen, director of bunkers at Oldendorff, told Ship & Bunker on the sidelines of the Sibcon industry event in Singapore on Wednesday.

"The owners are getting a more economic focus," Jørgensen said.

"They don't need the spread of $150/mt; they are fine with $80/mt."

This applies in particular to those owners that have optimised their operations to ensure maximum scrubber utilisation rates, keeping their savings high.

The phenomenon is also likely to have been driven in part by lower production costs for scrubbers, with Chinese suppliers understood to have cut prices recently.

While uptake for scrubbers on newbuild ships has been strong, demand for scrubber retrofits on existing ships has been much scarcer because owners have not wanted to take their vessels out of service, Minerva Bunkering CEO Tyler Baron told Ship & Bunker.

"When the high-five [scrubber spread] has been particularly wide, it hasn't really stimulated a lot of retrofit activity, and that's principally because the opportunity cost just became too high," Baron said.

"Freight rates strengthened, the yard slots got constrained and therefore even at a $200/mt plus high-five, you weren't getting a lot of retrofit activity.

"But it's a very different story on the newbuild side."

The spread between Ship & Bunker's G20-VLSFO and G20-HSFO indices has averaged $117.50/mt so far this year.