When will the shipping industry see a second wave of scrubber orders?
While some manufacturers don’t think a rebound will materialise until the second half of 2021, others say activity is already on the rise.
Undoubtedly, 2020 marked a painful year for suppliers of exhaust gas cleaning systems (EGCS) for ships. When the spread between high sulphur fuel oil (HSFO) and very low sulphur fuel oil (VLSFO) fell below USD 50.00 per ton during the height of the pandemic, demand for scrubbers waned.
Today, with the spread hovering north of USD 100.00, the economics associated with the USD 1m to 2m investment are looking more and more appealing to shipowners — particularly those operating the types of tonnage that consume the most fuel, such as VLCCs, capesize bulkers and large containerships.
While the spread between VLSFO and HSFO is widening, few industry analysts believe it will reach levels predicted prior to the pandemic. As such, shipowners that shop for scrubbers in the months ahead may be more price-conscious than they were in the past.
An uptick in bargain shopping bodes well for the many Asian manufacturers whose EGCSs tend to cost less than those offered by larger Scandinavian competitors that continue to dominate the market.
A renewed demand for scubbers
Today, the company says it’s seen a sharp rise in queries from prospective customers in recent weeks — and management is confident this trend will continue in the foreseeable future.
According to president Minsu Seo, Global Echo is on the verge of landing retrofit contracts for an aframax tanker and three containerships: one 6,500-teu and two 1,800-teu. The installations on these, he notes, won’t impact cargo volumes because the MS-SOx system requires so little space and is customized to each vessel’s existing structure.
What the future holds
Looking ahead, the company expects to seal five more retrofit deals later this month. Separately, management confirmed reports that they’re in active discussions with ten other shipowners from Greece, Turkey and South Korea.
“We can provide the entire scrubber system to owners in only three months of delivery time plus two weeks of installation time,” Seo continued. “In addition to prompt delivery, the performance of the MS-SOx system is exceptional. Full-on compliance with IMO’s sulphur mandate is assured. That’s our edge.”
Unlike some of its closest competitors Global Echo offers turnkey contracts, which Seo describes as a “total solution” that eliminates the need for shipowners to enlist their own engineers and yards to complete the installation process.
Going forward, Seo says his company is doubling down on its campaign to expand market share — which is based on a firmly held belief that scrubbers will remain the safest, most economical means of achieving compliance with the IMO’s low-sulphur fuel mandate for ships over the next 10 years.
Are you tempted to equip your ships with scrubbers?
Whether you’re actively shopping for a system — or waiting to see if the gap between HSFO and VLSFO prices will continue to widen — Global Echo is equipped to provide guidance. The easiest way to get in touch is by contacting SJ Lee via email or connecting with him on LinkedIn.