Scrubber Payback Time Under Fire As Global HSFO-VLSFO Spread Drops to New Low

by Ship & Bunker News Team
Tuesday March 3, 2020

The average spread worldwide between high sulfur fuel oil (HSFO) and very low sulfur fuel oil (VLSFO) prices has narrowed to a new low, according to Ship & Bunker pricing, indicating extended payback times for shipowners who have invested in scrubber systems.

The HSFO-VLSFO spread for the Ship & Bunker G20 index of prices at 20 leading bunker ports worldwide narrowed to $134.50/mt on Monday, the least since the G20 VLSFO index started in early October and down from its recent peak of $313/mt on January 6.

The spread reflects the fuel saving a vessel with a scrubber can make before costs by continuing to burn HSFO while its competitors are forced to burn VLSFO.

For a VLCC with a scrubber that cost $2-4 million, consuming about 100 mt/day of bunkers, a spread of $300/mt would indicate it could pay back its capital investment in 67-133 days; with a spread of $150/mt that time would lengthen to 133-267 days.

The narrowing spread may lead to slightly lower earnings for vessels equipped with scrubbers, but is unlikely to be a concern for their owners; average spreads so far this year remain over $200/mt, and any scrubber payback time under two years is likely still to prove highly profitable.

Ship & Bunker News Team
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