Scorpio Bulkers: We Will Go Under if This Market Persists

The upside "could be very high" once the dry bulk recovery eventually kicks in.

Despite one shipping executive describing the dry bulk crisis being at an "Armageddon level", Emanuele Lauro, chief executive of Scorpio Bulkers Inc., says whoever the survivors are could be in store for a windfall.

Lauro's firm has sold all of its 28 capesize vessels at a loss of $400 million, and shares of Scorpio bulkers have lost 85 percent of their value in the past year, causing Lauro to tell The Wall Street Journal that "We never thought we would find ourselves in this situation.

"A lot of companies have gone under, and more will go under this year; we will go under if this market persists."

George Logothetis, chairman and chief executive of the Libra Group, cites falling demand from China as one reason the situation is at an Armageddon level and causing vessels to be offloaded at a discount.

Basil Karatzas, a New York-based maritime adviser, notes that number of capesize vessels currently in operation exceeds demand by over 50 percent: "It's a bloodbath, which calls into question the survival of many dry bulk shipping companies." 

Although the ability of large companies to access capital markets enables them to weather tough times, Ship & Bunker reported earlier this month that Star Bulk Carriers Corp. was recently warned by Nasdaq that it has six months for its stock to reach a minimum bid of $1 for 30 consecutive trading sessions, or it will face delisting.

Still, Lauro says he will try to retain his bulkers fleet of 49 smaller ships in the hopes of a recovery.

"This year is going to be very tough, but for those who can weather the storm, the upside could be very high," he said.

The Baltic Dry Index Friday set a fresh record low for the 14th consecutive trading day, ending the week on 354 points.