Dorian LPG is still betting on scrubbers.
Despite the narrow price spread between low sulphur fuel and high sulphur fuel, the shipowner believes the economics will work out after the Covid-19 pandemic subsides and still plans to install the exhaust gas cleaning systems on two more ships "in the coming months".
“Once Covid-19 conditions improve and market sectors recover, we expect fuel spread will widen again to pre-Covid-19 levels," said Dorian LPG (USA) chief executive John Lycouris, on the company's quarterly earnings call on Monday.
“Even though scrubber retrofits were rushed to meet the IMO 2020 commencement on 1 January, the installations were designed to perform for the remaining life of the vessels and cannot be judged on the very short term during which they have been operational under extremely volatile economic and market conditions.”
During 2020, Lycouris said the spread between the two fuel types ranged from $30 per tonne to $80 per tonne after rising above $200 at periods late last year.
Shipowners that opted for scrubbers, rather than opting to pay more to burn the IMO 2020 compliant low sulphur fuel, generally bet on a much larger difference between the fuels to justify the investment.
Lycouris said the volatility has “largely been the result of crude oil pricing in world markets, refinery utilization and product surpluses in the market, all impacted by Covid-19".
He did not name the ships that would receive the scrubbers, but said they would be undergoing the retrofits during their five-year special surveys.
Ten of Dorian's 22 owned vessels are fitted with scrubbers, which make up the largest scrubber-fitted VLGC fleet.
For the quarter ended 30 September — the second of Dorian's fiscal year — the company posted an adjusted loss of $4.3m.
It attributed the dip to a weaker spot market nearly halving its charter revenues year-over-year to $26,015 per day.
In late trading on Monday, Dorian's shares slipped $0.19 to $8.01.
