With high-sulphur fuel oil (HSFO) trading at about half the price of low-sulphur compliant bunkers, owners who fitted scrubbers are gloating about their savings — but shortages of 3.5% fuel outside of the main supply hubs are already being reported.
HSFO is selling for a worldwide average of $377 per tonne, while very low-sulphur fuel oil (VLSFO) is available at $673 per tonne, according to Ship & Bunker data — a much higher price spread than predicted by most analysts.
One large US owner, who asked to remain anonymous, told TradeWinds that it had seen a spread of between $270 and $310 across its fleet, much better than the $200 to $250 it had modelled for a return on investment.
The outfit does not expect the spread to narrow any time soon.
“Refineries are still going to be producing residual fuel and there’s not enough demand in the world to use it all,” the company said.
"Those who acted early to install scrubbers are gloating. The payback is much quicker than what's been modelled. Those still installing scrubbers are quite confident."
But Adrian Tolson, insight lead at communications consultancy Blue, told TradeWinds that the biggest issue he saw developing was a problem with the availability of HSFO, with refiners using it as feedstock for new products.
Drastic action
“Refiners have taken drastic action to get rid of the high sulphur,” he said. “As far as I can see, there is no HSFO in north Asia in [South] Korea, Japan, China and Taiwan, so if you are operating a capesize in that region, you may need to divert to Singapore to find fuel.”
He added that the US could also be a problem area.
Svend Molholt, chief operating officer of Danish bunker supplier Monjasa, said the issue of HSFO availability will arise in niche ports, not major hubs such as Houston or Singapore.
“We need to consider if we are now going to have to hold two products or three in niche ports like Portland, UK, where demand for HFSO is currently not very high.
"If, once in a while we receive a demand for it, it may not make economic sense for us to hold a supply, and prices will go up.”
Molholt added this could be a problem for tramp operators using scrubbers outside the main trading areas.
Joe Brady contributed to this story
