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Star Bulk’s scrubber investment pays back in 2.5 years

Photo: Liberian Registry First Chinese built shipboard scrubber(2) hoisting of the scrubber.jpeg
Nasdaq-listed Star Bulk Carriers recouped its $250m investment on scrubbers in just two and a half years.

Exhaust gas cleaning systems, or scrubbers, allow ships to continue using high sulphur fuel oil (HFO) with the global regulation for 0.5% low sulphur under the IMO 2020 regulation.

“We are pleased to report that as of the end of June, we have earned back our $250 million scrubber investment, within a span of 2.5 years,” commented Petro Pappas, CEO of Star Bulk, in the company’s half year results announcement.

The dry bulk shipowner has fitted scrubbers to 94% of its fleet of 128 bulk carriers ranging from 52,000 dwt to 210,000 dwt. The payback on the $250m investment over 2.5 years includes offhire for drydocking of the vessels to install scrubber systems and all related capital expenditures. Looking ahead Pappas said: "these scrubbers should augment our profitability for the foreseeable future".

The surge in the oil price this year has benefitted owners who installed scrubbers with the spread between the price of HFO and very low sulphur fuel oil (VLSFO), the main fuel of choice to comply with IMO 2020, growing significantly.

The current spread between HFO (IFO 380) and VLFSO varies quite significantly depending at which port a ship is refueling at from around $150 per tonne to over $400 tonne. Prices from Ship & Bunker for major bunkering hubs for VLSFO and HFO show the biggest saving at Fujairah and the lowest in Houston.

Port                             VLSFO per tonne       IFO380 per tonne

Singapore                    $742.50                       $500.50

Rotterdam                   $699.00                       $482.50

Fujairah                       $896.00                       $479.00

Houston                      $762.50                       $611.00

US  shippingstock analysts estimate that savings in the range of $4,000 to $6,000 per day for a scrubber fitted Supramax bulker.

The installation of scrubbers has not been without controversy, in particular open loop systems, where waste water is discharged into the sea, and a number of countries around the world have banned their use in national waters. An interactive map from the Exhaust Gas Cleaning Systems Association (EGSCA) provides an over of regulations in different parts of the world here.

 

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