Early adopters of scrubbers to reap rewards
A two-tier market will reward early adopters with higher timecharter rates and asset values as cost of low sulphur fuel increases dramatically.
That’s according to Maritime Strategies International (MSI) which said that scrubber-fitted dry bulk vessels could be earning a significant premium over those burning more expensive low sulphur fuel.
“As long as significant fuel price differentials remain between HFO and LSFO - and MSI believes there will be in the long term - vessels with scrubbers installed will attract a charter premium,” said MSI analyst Will Fray.
“As more and more ships fit scrubbers and over time as the finance is collectively repaid, vessels without scrubbers will face steep discounts and will become increasingly uncompetitive.”
Based on a five-year time horizon, MSI believes there will be a technology-led two-tier market for dry bulk timecharter rates, similar to that seen in the LNG sector.
Early-adopters will have a significant advantage in this scenario, but the positive effect will decrease as more ships install the technology.
The consultancy calculates that in 2020, the value of the timecharter premium for a Capesize benchmark vessel fitted with a scrubber will be $12,100/day, for a Panamax $6,800/day, Ultramax $6,300/day and Handysize $5,100/day.
Considering the daily-equivalent cost of a financing, fitting and operating a scrubber is a fraction of this, so the financial incentive to fit a scrubber remains strong.
MSI said there is likely to be upward pressure on both the price of scrubbers and the time it takes to install them, despite lower costs to produce scrubbers as the industry matures. This could potentially leverage the value of a vessel already fitted with a scrubber on 1 January 2020.
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