The market is hard to measure? Shipowner selection

The spread between high-sulfur fuels and low-sulfur fuels is shrinking dramatically, from $200 per ton to $110, and the gap has shrunk by nearly half. In order to reduce operational risks, major container shipping companies such as Maersk Line, COSCO Shipping Group and OOCL, which have been inclined to use low-sulfur fuels, have been installing desulfurization devices for ships since this year. With the sharp decline in the price difference between high-sulfur fuels and low-sulfur fuels, shipping companies may have to face a painful choice.

Not long ago, OOCL's 13,000 TEU container ship "Oriental Sin Chew" completed the modification of the exhaust gas scrubber on the Taiwanese ship, which caused concern in the industry.

Maersk Line, the world's largest liner company, has previously said that low-sulfur fuels will be used directly after the sulfur-restriction order takes effect. However, in May of this year, Alphaliner released information that Maersk Line will invest 263 million US dollars to install desulfurization equipment for 50 container ships in the fleet. Recently, there are also reports that Maersk Line has arranged nearly 100 vessels to modify the desulfurization unit.

According to Clarkson's statistics, 12% of the world's ships are expected to install desulfurization equipment at the beginning of next year, and this proportion will reach 15% by the end of next year. Currently, the Scorpio Group is the most installed desulfurization unit, followed by the Mediterranean shipping company, the world's second largest liner company, and the Mediterranean shipping company has ordered 180 exhaust gas scrubbers. In addition, the number of exhaust gas scrubbers installed by COSCO SHIPPING Group is also among the top ten in the world.

Yang Ming Shipping decided to install desulfurization equipment for its five 14,000 TEU container ships next year. In addition, the 20 container ships being built by Yangming Shipping will install desulfurization devices with an installation ratio of approximately 25%.

Container ships and tankers are the most fuel-efficient ships. Yangming Shipping has estimated that the daily fuel consumption of the 8000 TEU container ship and the new generation energy-saving 14,000 TEU container ship is 120 tons, calculated on the average annual sailing time of 290 days, and the annual fuel consumption is 44,800 tons.

This means that if the low-sulphur fuel costs $200 more per ton of sulfur fuel, an additional $69.6 million in additional costs will be required each year. If you choose to install the desulfurization unit, the cost is about 5 million US dollars. After deducting the ship's loss that cannot be operated for about 45 days after the docking of the ship, you can return it for more than two years.

However, this year, high sulfur fuel prices have remained high. In the first quarter of this year, crude oil prices were the same as last year. Aviation fuels only rose by 1.06%, while marine high-sulfur fuel prices rose by 17.02%. Industry insiders expect that the high sulfur fuel price is high because the sulfur limit is about to be implemented, and oil suppliers adjust production lines and supply chains to increase the supply of low-sulfur fuels and affect the price of high-sulfur fuels.

At the beginning of this year, the gap between high-sulfur fuels and low-sulfur fuels was about $200 per ton. As of July 12, Singapore's low-sulfur fuel price was $551 per ton, high-sulfur fuel price was $441, and the spread was only $110.

From the current situation, the installation of desulfurization equipment still has a cost advantage over the use of low-sulfur fuels. However, the market has obviously changed, and shipping companies have to face more difficult choices.