Fray believes the differential in cost between high sulphur fuel oil (HFO) and low sulphur fuel oil (LFSO) will see a two-tier market for dry bulk freight rates with scrubber fitted vessels the winners over a five year timeline.
The numbers are significant with MSI forecasting a $12,100 per day premium for capesizes, for a panamax $6,800 per day, for an ultramax $6,300 per day and for handysizes $5,100 per day. This excludes possible operational issues and the impact will be diluted the more owners that adopt the technology, but it does expect the price differential to remain for several years after the regulation comes into force.
“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 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.”
As demand for scrubbers increases having an exhaust gas cleaning unit fitted could improve the vessel asset value.
“The strong cost savings potential will have a positive impact on values of assets with scrubbers fitted as long as a timecharter premium exists. Theoretically, the value of a scrubber being installed can be calculated as the net present value of all future cash flows of the scrubber, including revenue, costs and terminal value,” said Fray.
Included in the dry bulk owners that have taken a major gamble on scrubbers are Scorpio Bulkers, Safe Bulkers and Star Bulk Carriers.