Platts debuts parallel IMO 2020 ship indices – and spread is huge
What will the daily savings be for a ship that has a scrubber installed, given the fuel spread on any particular day? That potentially multi-million-dollar question just got a lot easier to answer.
The IMO 2020 regulation, which goes into effect Jan. 1, will require all ships not equipped with exhaust-gas scrubbers to burn fuel with a sulfur content of 0.5% or less. Ships with scrubbers can continue to use cheaper 3.5% sulfur high-sulfur fuel oil (HSFO).
On Nov. 1, S&P Global Platts unveiled parallel dry bulk indices measuring rates that allow for daily comparisons of scrubber versus non-scrubber ship earnings.
The latest move follows the Oct. 1 introduction of the Platts Cape T4 Index, a weighted average of time-charter equivalent (TCE) assessments of four roundtrip voyages by so-called Capesize vessels (bulkers with a capacity of around 180,000 deadweight tons).
In response to a query from FreightWaves, Platts provided its inaugural scrubber versus non-scrubber assessments for the Platts Cape T4 Index as well as the two most important roundtrip voyages that comprise that index (China-Australia and China-Brazil).
What’s the spread?
Given the current price differential between 3.5% and 0.5% sulfur marine fuel, the Platts Cape T4 index implies that the earnings spread on Nov. 1 is $4,943 per day to the advantage of scrubber-equipped Capesizes. The spread is $4,302 on the China-Australia dual indices and $5,374 on the China-Brazil indices.
Data courtesy of S&P Global Platts
The current futures prices on ICE imply that these spreads should significantly widen. As of market close on Oct. 31, the spread between HSFO and 0.5% sulfur fuel – known as very low sulfur fuel oil (VLSFO) – was $202/ton in Amsterdam/Rotterdam/Antwerp (ARA) and $185/ton in Singapore........MUCH MORE
