Maritime market update: Scrubber installations are on hold due to low oil prices
Gasum says Risavika LNG index was down 1.6 % on lower European gas market prices week on week. The spread of covid-19 and mild weather continue to put pressure on LNG demand, while supply side remains quite healthy. There is still not enough demand to absorb all available LNG.
As OPEC+ agreement did not bring required support to the oil market, oil products front monthly prices were further down last week on low demand due to covid-19. FO 3.5 front month traded at 125.25 USD/t, 18 % lower, while low sulphur products lost 5-8 % compared to previous week. Stocks of fuel oil in the ARA hub increased 4.5% to 1.540 million mt last week, according to data from Bunkerworld, reaching over a 21-month high.
Low sulphur fuel oil price (MFO 0.5) went down by 50 % since the beginning of the year and has reached the level of fuel oil (FO 3.5) in January, when it was trading at 230 USD/t. This dynamics makes some shipowners to put installation of scrubbers on hold. Shipping company Stolt-Nielsen announced that it would cancel scrubber installations where possible. The company has identified 30 million USD of capital expenditure that can be cut in its tanker division, where scrubber installations have been the main capital cost.
