According to BIMCO, the current $200 per tonne price spread between very low sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) is increasing the advantage for ships fitted with exhaust gas scrubbers.
BIMCO says that the price gap between VLSFO and HFSO has widened following Russia’s invasion of Ukraine, although the price of HSFO could rise should the volumes of Russian HSFO coming into the market start declining due to sanctions.
Niels Rasmussen, chief shipping analyst, said: “Currently, 12% of the combined bulk, container, and tanker fleet has a scrubber installed. The majority of ships are therefore still dependent on low-sulphur fuels and their cost competitiveness is influenced by the cost spread between VLSFO and HSFO.” says Rasmussen.
Out of the total, the highest proportion of scrubber installations is for crude tankers, with 29% scrubber-equipped, and container ships with 17%. Bulk carriers are at 12% and only 5% for product tankers.
After bottoming out in late October 2020 at $40/tonne the cost premium for VLSFO has since increased, settling at around $150-160/tonne in late 2021, before the current rise.
Rasmussen continued: “Since Russia’s invasion of Ukraine, the spread has again increased and now appears to have settled around $200/tonne. In percentage terms the VLSFO premium is still around 30%, however, in absolute terms it translates into a saving for ships with a scrubber installed of $2,000/day for every 10t of bunker fuel consumed. If this premium continues, charterers’ willingness to pay a premium for ships with a scrubber installed will surely increase accordingly.”
However, some predictions suggest that HSFO may rise in price if the volumes of Russian HSFO coming to market reduce through sanctions, causing the differential to lessen.
