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Owners installing scrubbers for IMO 2020 warned on availability of HFO

With just a small percentage of ships fitting scrubbers owners are warned they will need secure availability of high sulphur fuel oil (HFO) in 2020 as the supply chain will be geared to delivering compliant low sulphur fuel oil (LFSO).

Douglas Raitt, regional consultancy manager for Lloyd’s Register Asia, estimated that at most 2,000 to 2,500 ships would have scrubbers installed when the IMO’s global 0.5% low sulphur fuel cap comes into force.

Speaking at Mare Forum Singapore Raitt questioned whether most suppliers were going to cater to just 5% of the market. Around 38m tonnes of HFO will be required annually, with most owners buying either compliant LFSO or marine gas oil (MGO).

“The fuel business is a supply chain industry and it will supply what the industry. If you have installed a scrubber talk to your supplier now and make sure on availability of HFO,” he said. “Most suppliers will only sell low sulphur fuel oil.

His comments echo what ExxonMobil told Seatrade Maritime News last October saying that customers requiring HFO would need dedicated supply chains and that this was “very much a one-to-one discussion”.

Read more: ExxonMobil seeks to reassure shipowners on 2020 compliant low sulphur fuels

Raitt also cautioned owners on the assumption that HFO would be significantly cheaper than LFSO, a key factor in terms of payback on the investment in an exhaust gas cleaning system. “All the shipowners assuming HFO will be dirt cheap are misguided.”

He noted early price indications from last month the spread between HFO and LFSO could be as low as $40 per tonne. This is far low than the levels of $250 per tonne being assumed by Scorpio Group which is fitting scrubbers fleet wide.

Read more: Scorpio Bulkers assuming $250 per tonne fuel spread for scrubbers