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Shipping gauging impact of coronavirus on scrubber installations

Shipowners who have opted for scrubber installations to comply with the International Maritime Organization’s global low sulfur mandate are assessing the impact of the coronavirus outbreak amid the potential for further delays in scrubber fitting programs, industry sources told S&P Global Platts.

This comes at a time when the industry is already grappling with rising fuel costs and bunker fuel quality issues, reflecting the drastic change brought about by the implementation of the IMO 2020 0.5% sulfur cap on marine fuels from January 1.

“I would say it is still early to gauge the impact of the virus. Most Chinese companies are only returning to work on or after February 3, so we will only see if there’s any real impact by end of next week,” a bunker trader said late last week.

According to Platts Analytics, about 2,200 ships with scrubbers installed were operational globally in January, which was expected to rise to 3,500 ships by year end, with more upside potential in 2021.

Delays on other factors
“Nothing has affected scrubber installations on our side,” a Singapore-based source at a global shipping company said Friday, referring to the coronavirus outbreak.

The current delays at some yards were more likely due the huge number of retrofits because of the IMO 2020 rule, he said. The delays were being accentuated by yards having to also fit ballast water treatment systems, he added.

The IMO’s Ballast Water Management Convention requires ballast water treatment systems, or BWTS, be fitted on ships during docking surveys between 2019 and 2024 to substantially eliminate organisms from transferring between marine ecosystems.

Global technology company Wartsila said it retained a cautious yet positive outlook for the uptake of scrubbers.

“I believe we will get some more activities in scrubber order intake this year compared to 2019, but it’s still to be seen,” Roger Holm, president of Wartsila’s Marine Solutions unit, said during the company’s 2019 results announcement last Thursday.

“We still haven’t seen a huge uptake on activities, even if the sentiments are good, but this is coming more from the fact that installations for retrofit scrubbers take much longer than anticipated. There is a shortage, especially for large vessels on yard capacity, so we are still into the second half of this year to get yard capacity for scrubber installations for the bigger vessels,” he added.

Scorpio Bulkers, which also announced its latest quarterly results last week, said that from a technical standpoint, the average retrofit base per scrubber is 25 days.

“Whilst from a technical standpoint, we are not experiencing issues or delays, it turns out that the off-hire – the average off-hire of the fleet at Scorpio Bulkers – is closer to the 40-day mark for scrubber retrofitting,” Emanuele A. Lauro, company chairman and CEO, said in an earnings call. “As I said, 25 days of which are technical stoppage and 15 are spread around waiting time or delays to get out of the yard or above normal,” Lauro added.

However Lauro said: “This [coronavirus] has not impacted anything at the yards”.

“I can tell you that the workloads and the workforce is proceeding as normal. However, whether this will be the case if the outbreak gets worse, who knows?” he added.

Weakening sentiment
Other sources were less optimistic. “There will be delays in scrubbers installations due to the coronavirus,” a shipowner source said Friday.

These kind of installations are labor intensive, and the majority of yards are in China, with a sizable amount of labor coming from Hubei and neighboring provinces, he said.

“So, there is effectively very little labor to service these projects. Likewise, no outside vendors are going to likely travel and attend these projects,” he said.

“I expect a delay of at least 2-3 weeks in the current scenario, but a bigger outbreak could derail schedules significantly,” he added.

A Zhoushan-based trader said: “I haven’t heard of any scrubber installation delays [due to the virus] but it is very likely.”
Source: Platts

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