The joint venture ME Production China will manufacture and install scrubbers in China for both newbuildings and retrofits with Torm talking a 27.5% stake.
Torm has placed a firm order for 16 scrubbers from ME Production China and options for 18 more. With the orders from the joint venture Torm has committed to install scrubbers on 21 vessels, and up to 39 with options, representing half its fleet. The scrubbers average less than $2m per unit including installation Torm said.
“This strategic move provides us with a substantial economic interest in a venture that has the potential to be a large-scale international scrubber manufacturer. It will also result in Torm obtaining attractive prices for the scrubber investments that already have a short payback time,” said executive director of Torm Jacob Meldgaard.
By taking a stake in the joint venture Torm also secures availability in an increasingly tight market as owners rush to meet the 1 January 2020 deadline for the IMO's 0.5% global sulphur cap.
“In addition to the economic potential of the joint venture, it allows us to secure availability of high-quality scrubbers, which could pose a challenge to some owners as we approach the 2020 deadline for sulphur compliance set by IMO,” said head of technical division at Torm Jesper S. Jensen.
Torm joins John Fredriksen's Frontline as a shipowner investing a scrubber manufacturer. Frontline took a 20% stake in Fenn Marine Scrubbers early this year.