World News
Star Bulk's Scrubbers May Pay for Themselves by the End of This Year
Dry bulk shipping company Star Bulk Carriers expects its investments in scrubbers to turn a profit by the end of 2021, despite last year's significant narrowing of the fuel price spreads that make them commercially viable.
At present the savings made by using HSFO with the scrubbers rather than paying more for VLSFO have paid for about half the installation cost of the emission-cleaning systems, Hamish Norton, president of Star Bulk, said in a podcast hosted by Capital Link this week.
The price spread between VLSFO and HSFO at Rotterdam -- a key measure of the savings to be made using scrubbers -- narrowed from $298/mt at the end of 2019 to as little as $26.50/mt in April 2020 after last year's crash in crude oil prices, according to Ship & Bunker pricing. The spread has since widened, and stood at $92.50/mt on Wednesday.
Part of Star Bulk's success with its scrubbers while others have struggled more with the narrow price spread was the company's hedging ahead of 2020. By May of last year the company had secured 151,000 mt of its HSFO requirements for 2020 using prices in Singapore at an average discount to VLSFO of $214/mt.
"We've covered already something like half the cost of the scrubbers, because we did hedge a bunch of fuel spread at the beginning of 2020 and the end of 2019," Norton said.
"And I think we'll cover the rest of the cost of the scrubbers in 2021, if not, in fact, more than that, and then after that, it's pure profit.
"We think it was a good decision, and it's contributed a lot to our earnings in 2020."
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 565.50 | 4.50 | 678.50 | 4.50 |
| Rotterdam | 512.00 | 3.50 | 676.00 | 9.00 |
| Houston | 552.00 | 3.00 | 682.00 | 4.00 |
| Fujairah | 555.50 | 7.50 | 753.00 | 1.50 |
| Global 20 Ports Average | 583.50 | 4.00 | 762.50 | 2.50 |
| Global 4 Ports Average | 546.50 | 4.50 | 697.50 | 2.50 |
| Global Average Bunker Price | 632.50 | 2.00 | 811.00 | 1.50 |
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