300 Capes to Install Scrubbers in 2018 Creating Big Supply Disruption

ScrubberScrubber; Image Courtesy: Wartsila

The exhaust gas cleaning system or the scrubber has been the buzzword for the industry ahead of the approaching 2020 sulphur cap.

Industry opinions vary on whether to proceed with the installation of scrubbers or pursue other options like marine gas oil (MGO) or LNG as fuel.

Capesize owner Seanergy Maritime will most likely proceed with the installation of scrubbers for the majority of its fleet due to the potential upside from the technology stemming from the current price spread between high sulhur fuel oil (HFO) and MGO.

“We will proceed with the installation of scrubbers on the 60-70 percent of our tonnage, and we will try to get into agreements with charterers to split the cost or cover the majority of the CAPEX,” Stamatis Tsantanis, Chairman and Chief Executive Officer of Seanergy Maritime said in a Capital Link webinar.

He added that due to the fact that the majority of ships in the global fleet will not install scrubbers, there will a higher demand for MGO and more ships will opt for slow steaming, resulting in less ships in the water. As explained, this is good news for shipping in general, especially Capesizes.

“Our estimate shows that around 300 Capes will proceed with the installation of scrubbers in 2018 in order to be ready for the 2020 sulphur cap. This is a big percentage of the fleet, creating a big supply disruption for the market next year and in 2020,” he said, adding that the tonnage deficit will result in higher returns for Capesizes.

Speaking on the installation process itself, Tsantanis said that it is a very complex endavour resulting in big risk for companies.

“We hear that a number of high-profile scrubber producers are failing to generate the sulphur levels required by the IMO 2020, resulting in extension of installation periods from up to 30 days to 60 days,” he pointed out.

“I believe that retrofit exercise on the eligible vessels will be way more demanding than initially anticipated.”

Commenting on the implementation of the IMO’s 2020, Eddie Valentis from Pyxis Tankers said that for a fleet of medium size vessels scrubbers were out of the question.

“Also, there is a lot of uncertainty of the economic viability of a retrofit, especially for an ECO fleet, like ours,” he said.

Generally speaking, the product tankers and MRs will benefit for the new regulations, due to a low orderbook and scrapping of less efficient vessels, making ECO vessels, that are more fuel-efficient, in high demand. The tonne-mile demand is also expected to increase as there will be considerable need for the transport of MGO and diesel oil to various bunkering ports.

“The disruption to the market is positive, as higher bunker costs will result in slow steaming, thus reducing capacity. We estimate that there will 50 vessels less in the MR sector due to slow steaming in 2020,” he added.

Aristides Pittas, Chairman and CEO of Euroseas Ltd and EuroDry, said that he estimates that between 15-20 percent of the Capesize vessels will have scrubbers installed by the end of 2019 and even less on smaller size bulkers and containerships.

Pittas is not in favor of the technology, stressing it is expensive and that the gains from its installation, if any, are limited. He also pointed out to the engineering failures and challenges, adding his fleet would not be installing scrubbers.

World Maritime News Staff

 

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