After a turbulent 2020 that saw a brief oil price war, a global pandemic and oil demand destruction, it is perhaps not surprising that to many it feels like concerns surrounding IMO2020 have long gone. The transition to compliant bunker fuels went relatively smoothly, despite some teething issues. Prior to the onset of the pandemic, owners of scrubber tonnage enjoyed a very healthy discount for high sulphur fuel oil (HSFO) versus very low sulphur bunker fuel (VLSFO), which averaged between $250/tonne and $300/tonne in key bunkering hubs during December 2019/January 2020. However, the pandemic driven collapse in oil prices meant that the spread sunk to just $40 - $60/tonne between April and November last year. For scrubber tonnage, this meant that the savings for burning HSFO sunk from $16,000/day in January 2020 to just $3,000-$4,000/day (VLCCs trading TD3C route, slow steaming basis) for most of last year. Despite such a dramatic decline, the scope for scrubber cancellations has been limited due to contractual obligations with shipyards and scrubber manufacturers.
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