[E-PORTS News] Fuel Cost May Rise 30% Next Year

From: China Shipping Gazette, edited by E-PORTS Category: Industry 29/Sep/2019

There’s only three months left before the implementation of IMO 2020 Sulfur Cap. Everyone is most concerned about the cost on using low-sulfur oil and installing scrubbers.

Drewry recently made a prediction on the cost of low-sulfur oil. It holds that the cost of low-sulfur oil is about 30% higher than that of high-sulfur oil at Asian ports that have already started selling compliant oil. However, considering that the demand for low-sulfur oil will greatly increase in November and December, the market environment will be different from that of today. Therefore, the price gap between the two kinds of oil will also change to some extent.

The price of low-sulfur oil is expected to rise in 2020, but may decline in 2021 and 2022.

According to Alphaliner’s latest weekly report, data from ports such as Rotterdam and Singapore show that in July, the price gap between high-sulfur oil and low-sulfur oil was US$ 100-150 per ton, while by August, the gap has risen to over US$ 200.

At present, the trading volume of low-sulfur oil is still relatively low and the price gap is large.  Alphaliner further analyzed that if this trend (increasing price gap) continues, shipowners installing scrubbers will gain cost advantages because they can continue to use low-priced high-sulfur oil.”

The world’s top 12 liner companies have all tried to install scrubbers at present. In fact, the price gap between two different kinds of oil and the cost of installation and maintenance of scrubbers are the main reasons for shipowners to choose. In addition, some shipowners chose to install scrubbers as fuel suppliers have not made it clear whether they can supply enough compliant oil for the market.

If the price gap continues to increase in the future, scrubbers will undoubtedly be more attractive considering the cost. Drewry believes that ships that meet the new environmental regulation by installing scrubbers can continue to burn high-sulfur oil while avoiding price fluctuations of low-sulfur oil.