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Friday, January 24, 2020 

Scrubber manufacturer Yara has been looking at the initial effects of the IMO 2020 sulphur emissions regulations, and has seen that some patterns appear to be emerging.

In adapting to the regulations, most vessels have shifted to compliant fuels like VLSFA and MGO, but more than 4000 vessels are, or are soon to be, equipped with SOx scrubbers. The availability of HFO has shown no sign of decreasing, as some predicted, with scrubber-equipped ships able to bunker with HFO in every port in which it is needed.

As expected, the price differential between the fuel alternatives increased significantly as the new rules kicked in, currently running in the order of US$300/t, which makes the business case for installing SOx scrubbers and continue sailing on HFO extremely attractive. Early evidence has shown that vessels equipped with SOx scrubbers are the winners, with charter rates for these vessels having increased significantly compared to those not yet having scrubbers installed.

Kai Laatun, Yara's Director Sales and Public Affairs, sees that certain patterns are emerging amongst the winners. Most scrubber-equipped vessels have been fitted with the open loop type, and simply shift to compliant fuel for their short stints in areas where SOx scrubber washwater discharge is not allowed. This is typical for bulkers. Vessels trading more regularly in such areas, opt for hybrid scrubber systems capable of sailing with zero washwater discharge where this is mandatory.

"Pure closed loop systems are nearly non-existent," says Laatun. "The washwater discharge issue is basically political as all available scientific advice – from well reputed institutions like CE Delft, the Japanese Ministry of Land, Infrastructure, Transport and Tourism (MILT) - evidence that no harmful effects can be found from the discharge."

Laatun reports that during the second half of 2019, the scrubber market calmed down slightly from the previous boom, mostly as a result of congestion at scrubber installation yards. "This is now changing, as the first movers are getting their vessels back into trade," he said. "Shipowners are now mulling over the increased profitability of having SOx scrubbers, and we see inquiry activity picking up and new orders coming in. The open loop/hybrid selection issue does not affect the SOx scrubber suppliers, being agnostic to the washwater discharge issue. We can deliver both solutions anyway, and even upgrade an open loop system to a hybrid is simple and does not require any dry docking.

"It’s evident that the SOx scrubber market will soon pick up significantly, given the substantial competitive advantage for the vessels with SOx scrubbers. The only question is; will the market just be extremely good or even go boom again?"

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