European Bunker Market Favors Scrubbers

As a result of the IMO 2020 global sulphur cap, rising marine fuel prices in Europe in will give a boost to shipowners that invested in scrubbers to enable the continued use of high sulphur products.

Demand for bunkers is likely to rise when vaccines continue roll out and global trade recovers. Recently, the price of 0.5% fuel oil in Rotterdam has increased by more than $100/T since November.

Should these price trends continue throughout the year, the difference between the price of 0.5% and 3.5% sulphur fuel oil is likely to widen, lessening the payback times for those that invested in scrubbers earlier on.

It is widely predicted that the price of 0.5% fuel oil in Europe could also receive support in 2021 when refining margins for non-marine transport fuels improve as demand returns to normal levels.

Recent months have seen the demand for HSFO rising as ships equipped with scrubbers return to the water.

In addition, a vaccine-driven revival of the cruise sector will boost HSFO demand, and ultimately prices. Recent data show that over 200 cruise ships have scrubbers. This means that as the global fleet returns to cruising, prices for 3.5% sulphur fuel oil are destined to skyrocket.

The silver lining of rising prices is given the immense task of widespread Covid-19 vaccinations, any cruise-driven boost to HSFO demand will happen later in 2021, if at all. Most cruise lines continue to cancel cruises due to local health restrictions and changing guidelines.

As for Marine Gas Oil (MGO) sales, it is predicted that demand will continue to fall in Europe. MGO was a popular choice at the turn of 2020 when 0.5% sulphur cap came into force, but demand is declining as ships with scrubbers return to sea.