[280320.EN.BIZ] Suspension of Cruise Sector's Massive Fuel Use Boosts Scrubbers

THE suspension of cruise ship deployments means a sudden fall in demand for heavy fuel oil, depressing its price, and giving a boost to scrubbers, reports New York's FreightWaves.

Cruise ships, unlike cargo ships, are voracious consumers of fuel, not only to get from A to B, but to power their massive hotel superstructures.

For example, a 10,000-TEUer sailing at 16 knots consumes 100 tons of fuel a day. Assuming 250 days at sea per year, its annual consumption would be 25,000 tons. The cruise industry's consumption is the equivalent of three hundred 10,000-TEU ships.

Similarly, a 180,000-ton capesize bulker that burns 47 tons of fuel a day and is at sea for 300 days a year would consume 14,100 tons annually. The cruise industry consumes the equivalent of 530 capesizes.

The sudden end of cruise itineraries due to coronavirus has reduced global demand for both 3.5 per cent sulphur heavy fuel oil (HFO) and 0.1 per cent sulphur marine gasoil (MGO).

This, in turn, could affect the bottom lines of commercial ships, particularly those with exhaust-gas scrubbers.

Carnival Corporation owns 105 vessels under Carnival Cruise Lines, Princess Cruises, Holland America Lines, P&O Cruises, Cunard Line, Costa Cruises, AIDA Cruises and Seabourn Cruises.

Its ships consume 3.312 million tons of marine fuel a year at a total cost of US$1.562 billion, and the company expected to consume 3.405 million tons of fuel a year.

The IMO 2020 rule requires all ships without exhaust-gas scrubbers to consume either MGO or 0.5 per cent fuel known as very low sulphur fuel oil (VLSFO); those with scrubbers can still burn HFO.

Putting their individual estimates together, the US-listed cruise owners had been on track to consume a combined 5.8 million tons of fuel this year. On a pro rata basis, this implies that the entire global fleet would have consumed around 7.5 million tons.

The halt to cruise deployments will translate into an abrupt reduction in demand for heavy fuel oil, but not for very low sulphur fuel oil (VLSFO) because cruising favours marine gas oil (MGO) over VLSFO, giving a tailwind for the VLSFO-HFO spread, a plus for cargo ships with scrubbers.

Source : HKSG.