Dinghai ship companies seize opportunities from fuel sulphur limit

A piece of desulfurization equipment is lifted up to be installed on a Hong Kong cargo vessel at the PaxOcean Engineering Zhoushan Co located in Dinghai district, Zhoushan, East China's Zhejiang province. [Photo/zj.zjol.com]

With the 0.5 percent global fuel sulphur limit regulation released by the International Maritime Organization to come into effect on Jan 1, 2020, ship companies in Dinghai district, Zhoushan, East China's Zhejiang province, are seeing new growth opportunities ahead.

Large ships normally use high-sulphur fuel (with a sulphur content of 3.5 percent). With the new limit, more and more shipping companies are now starting to install desulfurization equipment on their ships, said Liu Chengbo, director of the technical department of a Shandong-based shipping company.

Liu has recently been overseeing the installation of desulfurization equipment on a Hong Kong cargo vessel at the PaxOcean Engineering Zhoushan Co located in Dinghai district.

"Low-sulphur fuel will save the vessel around $20,000 a day compared with high-sulphur fuel. Although the purchasing and installation of the equipment costs $3 to $3.5 million, the money will be made back within one to two years," said Liu.

Because the equipment is large, reconstruction of ships is necessary, said Li Yuanlong, general manager of the PaxOcean Engineering Zhoushan Co in charge of ship repairs.

The company established a special task force to carry out such reconstruction in the second half of last year, and has reconstructed more than 40 large ships since then.

According to Li, reconstruction is three to four times more expensive than standard ship repairs. 

"We are expecting to generate 450 million yuan ($65 million) in our ship repairing business this year. Reconstruction for desulfurization equipment installation will account for nearly 67 percent," added Li.

Many other local ship companies have also benefited from the required ship reconstruction. Zhoushan Zhongtian Heavy Industry Co has undertaken the reconstruction of four ships and plans to reconstruct 50 this year. The company's monthly output hit 30 million yuan in March for the first time.