Monday, 24 February 2020

Owners face long scrubber queue for 2020
By Michael Angell, TradeWinds

Shipowners still looking to install scrubbers on their vessels face delays past the 2020 deadline for complying with low-sulphur emissions rules, market experts say.

In a Stifel-hosted conference call, DNV GL environmental head Stine Mundal says there has been a significant uptick in the number of owners placing orders to retrofit ships with scrubbers ahead of the International Maritime Organisation deadline for 0.5% sulphur emissions from ships.

"If you would like to go for scrubbers, you really should have decided yesterday because the main makers are getting quite full orderbooks," Mundal said.

The cumulative number of ships with confirmed scrubber orders through 2020 is currently 873, Mundal says, up from 346 confirmed ships at the end of 2017.

"It's really increasing month-to-month," Mundal said.

Scrubbers found their first home on cruise ships and ferries due to their frequently operating within emissions control areas.

But Mundal says the business case for scrubbers is making sense for a wider variety of commercial shipping. Bulkers, tankers and boxships now make up 60% of confirmed scrubber orders.

"We see a drastic shift in which kind of ship segments that are going for scrubbers because we are approaching 2020 and also because the market is more open to this technology and less afraid of it and are more uncertain of the fuel scenarios going into 2020," Mundal said.

The three largest manufacturers of scrubbers - Wartsila, Alfa Laval and Yara Marine - have 70% share of the market. Mundal says these manufacturers are likely not able to accommodate new installations prior to January 2020.
But the 30-odd smaller manufacturers in the market may only have waits of seven to nine months for a new installation, Mundal says.

Ronnie Petersson, executive director of scrubber installer US-based Baltic Marine, agrees with the assessment that commercial shipping "has finally come around and is placing orders of scrubber systems."

"That said, there is no way that all affected shipowners wanting to have a scrubber installed by 2020, will indeed have one," he added. "We know that leading system providers like Wartsila, Yara, Alfa Laval, to name the top three, have reserved capacity to some preferred clients but it’s far from sufficient to meet demand."

Baltec Marine is looking double its scrubber installation volume next year and "our order book is quickly getting filled with multi-vessel contracts for 2019 and beyond," Petersson said.

"The industry has seen this coming for quite some time but it has taken longer than expected for the big shipowners and management companies to conclude their analyses and secure the necessary funds that comes with it," Petersson said.

DNV and Baltec are not the only ones seeing tighter scrubber markets. Frontline Management highlighted that order slots for scrubbers may be a pressing issue in its June acquisition of a 20% stake in manufacturer Feen Marine Scrubbers.

In announcing the deal, Frontline chief executive Robert Hvide Macleod says the capacity to install scrubbers "will present a challenge to many owners as the deadline for sulphur emissions compliance approaches."

Classification society Lloyd's Register also recently said shipowners may be hard pressed to secure a scrubber installation ahead of January 2020.

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