Positive Outlook for Scrubbers Propping Up HSFO Futures Prices

by Ship & Bunker News Team
Wednesday October 17, 2018

The recent surge of interest in using marine scrubbers as an IMO 2020 compliance solution is helping to bolster HSFO futures prices.

"The more positive outlook for scrubbers could reinforce the trend seen over recent months of a narrowing discount of fuel oil relative to gasoil," Reuters reported Vienna-based consultancy JBC Energy as saying.

"Expectations that HSFO demand could remain more robust than perhaps previously expected now helping to prop up HSFO prices along the forward curve."

After an explosion of orders over the summer, the latest numbers from DNV GL indicate there are now 1,850 vessels with installed or confirmed orders for the technology, up from 817 in May, and the number is now thought to "easily" be able to reach 2,500 by 2020.

Scrubbers will allow vessels to continue burning otherwise noncompliant HSFO after the global 0.50% sulfur cap on marine fuel comes into force on January 1, 2020.

The attraction is that in the post-2020 market, HSFO is expected to be significantly cheaper than any of the inherently complaint 0.50% maximum sulfur fuels.

But despite a number of agencies making upward revisions to their HSFO demand projections, today the spread between HSFO and 0.50% sulfur gasoil is around $28/bbl - still enough for scrubbers to make economic sense, according to JBC Energy.

Another issue is that, as a recent analysis by Ship & Bunker noted, simply knowing the number of vessels with scrubbers installed is likely not enough to determine HSFO demand.

Ship & Bunker News Team
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