Scorpio Bulkers reduces loss in ‘improving rate environment’

Scorpio Bulkers has reduced its loss for the first quarter compared to the year-ago deficit, thanks to a surge in revenue from higher charter rates under improving operating conditions in the dry bulk shipping market.

The dry bulk shipowner narrowed the first quarter loss to $34.56m compared to the deficit of $58.26m in the year-ago quarter.

Revenue for the first three months was recorded at $34.73m, significantly up from $10.24m in the previous corresponding period. The rise in revenue was due to higher time-charter equivalent rate of $8,608 per day per vessel for its fleet of 47 owned and one time chartered-in vessels, compared to the rate of $3,404 for 31 owned and seven time chartered-in vessels.

Scorpio Bulkers noted that the higher rates were attributable to increased worldwide demand across all bulk sectors, regions and commodities, as well as a diminishing supply side as fewer vessels are now on order.

“In general, we do remain highly optimistic for the dry cargo market recovery, which we feel is gradually shaping up, and look forward to further strengthening our position in the market in what is an improving rate environment,” said Emanuele Lauro, chairman and ceo of Scorpio Bulkers.

For the second quarter, the shipowner has booked around 58% of its fleet days on average 8% higher than the first quarter.

Robert Bugbee, president of Scorpio Bulkers, noted in particular that the pricing of iron ore coming down is “very constructive” for the long term fundamentals of the dry bulk shipping market.

“It’s obviously going to be more beneficial for demand growth, and also it’s going to put further pressure on those marginal Chinese iron ore producers,” Bugbee commented.

With asset values on the rise, Scorpio Bulkers has seized the opportunity to dispose of two 2014-built kamsarmaxes – SBI Charleston and SBI Cakewalk – for a total of approximately $45m to an unaffiliated third party.

The net cash proceeds for Scorpio Bulkers after paying off the related debt, as well as termination fees and commissions, is approximately $24.2m.

The company also completed its newbuilding program of 48 ships, taking delivery of five of them during the first quarter and the final vessel on 1 April.

Meanwhile, Scorpio Bulkers is keeping a keen watch on regulatory changes in the market, particularly on the implementation of IMO’s Ballast Water Management (BWM) Convention in September this year and the 0.5% fuel sulphur content cap in 2020, according to coo Cameron Mackey.

Mackey said owners will have to decide if their fleet require their ballast water treatment systems (BWTS) to be approved in accordance to the IMO standard or to the more stringent US Coast Guard (USCG) standard.

“Now, if you do not care about the ability to trade your vessel to the US at any point in the near future, you don’t have to worry about the US standard; however, the (US) Coast Guard has been adopting a very stringent view, rigid view to implementation of the convention and not allowing for normal extensions or waivers to the installation of the equipment,” he said.

On the issue of installing scrubbers to remove sulphur from bunker fuel, Mackey expressed concern on the abatement technology of being one that is simply taking pollutants in the air and putting them into the sea. “We consider it only a matter of time before close-loop scrubbers become required, not just open-loop scrubbers,” he said.

Posted 21 April 2017

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

Lee Hong Liang

Asia Correspondent

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