The Paradox of the Scrubber Market

The scrubber market was presented to the market a few years ago, such as LSFO or MGO and LNG DF, as a solution to the new IMO's regulations, because of 'HFO' is not satisfied with sulfur cap 2020. Scrubbers have been rising in the market over the past few years, but not now.

The reason for this is crystal clear. In the new shipbuilding, shipowners are ordering Dual Fuel ships or using Low sulfur oil. In the retrofit, the use of LSFO or MGO is a trend in the market. But we know from a lot of experience that installing scrubbers is much more economical than fueling LSFO and MGOs. However, there are many shipping companies that do not install scrubbers due to shortcomings such as cargo loss and maintenance.

And now, we have a new regulation called carbon emission control. The long-term trend is responding to low-carbon emissions such as methanol and LPG, including LNG, as well as fuel oil that is easy to respond to regulations on sulfur oxide emissions and nitrogen oxide emissions. But there's a problem we haven't talked about here. It's the Ukraine-Russia war and the Corona problem. The closure of the city due to the war and COVID-19 caused a sharp rise in raw material prices.

Paradoxically, the rise in raw material prices has become a game changer in the scrubber market, because unstable alternative fuel supplies drives into price instability. This is because more ship owners take advantage of DF engines from the new shipbuilding, but use existing fuels instead of alternative fuels and wait until supply and price of alternative fuels stabilize.

As a result, the global energy market crisis is likely to be another opportunity for scrubber makers.