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Friday, March 19, 2021 

BIMCO analysts have noted that now 15 months have passed since the implementation date for the IMO global sulphur cap, and during that time, the number of scrubbers installed on the world fleet has nearly doubled, from 2,011 ships on 1 January 2020 to 3,935 by 1 March 2021.

Among the main shipping sectors, 15.9% of all containerships (28.7% in TEU), 11.4% of all dry bulkers (22.7% in DWT), 24.5% of all crude oil tankers (29.9% in DWT) and 4.2% of all oil product tankers (13.4% in DWT) are now fitted with a scrubber to remove sulphur oxides from the exhaust gasses.

As the lion’s share of the world fleet replaced high-sulphur fuel oil (HSFO) with low-sulphur fuel oil (LFSO) to be compliant with the IMO 2020 global sulphur cap, overall bunker sales rose in the world’s by far largest bunkering hub, Singapore. Total bunker sale volumes grew by 5% in 2020 and have continued to climb in the first two months of 2021 (+2.7% y/y); an indication of the shipping industry’s ability to deliver all the way through the pandemic. One quarter of total bunker sales in February 2021 was HSFO, a share that has only risen since January 2020, when no more than 17% of sales were fuel oil for ships with a scrubber installed.

From the start, the debate was about the bunker price spread and therefore the choice between HSFO and investing in a scrubber or using LSFO to comply with the new sulphur regulation. As 2021 arrived and the crazy 2020 was nearing an end, the next normal seemed to be in the making.

Peter Sand, BIMCO Chief Shipping Analyst, said: “The lowest price spread can be found on the US west coast while the largest spread can be found in the Middle East. In between, you have US$118/t as the most common spread. That’s the price spread you will find in Singapore.”

Prior to the implementation of the sulphur regulation, the then-watched MGO-HSFO spread hovered around US$200/t, but it was clear that a new and lower spread would settle. As the ‘new standard’ LSFO is now established, the pricing of the product seems to have arrived at the next normal.

“There is a clear tendency that it is the large ships that burn most bunkers which have been preferred for scrubber installations. But it goes for all: as voyage costs are lowered, earnings are higher,” added Sand. “As the bunker price spread now seems to have found a steady level slightly above US$100/t, ship owners and investors are increasingly likely to order new ships with a scrubber preinstalled today, when compared to the sub-$100 spread of last year.”

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