Shipowners that spent millions of dollars on exhaust gas scrubbers may not only see strong returns from fuel-price spreads, according to Eagle Bulk Shipping's Gary Vogel.
There may be some extra cash in it for them when it comes to asset values, the Connecticut bulker owner's chief executive said at a conference call with analysts on IMO 2020.
The vessel price boost could be a boon to the New York-listed bulker owner, which sought to grab a first-mover advantage by becoming the largest owner of scrubber-fitted supramax and ultramax bulkers and which is planning to add more of the equipment.
"Today, I think you'd be hard-pressed to find an owner willing to sell a scrubber-fitted vessel anything close to the installation, given the current fuel spread and the forwards," Vogel said Wednesday.
"We certainly wouldn't. We're quite optimistic about the investment and where it is today. I imagine right now that the ask would be significantly higher but I'm not aware of any scrubber-fitted vessels that are currently on the market."
Among its scrubber moves, the New York'listed shipowner bought four 2015-built, 63,500-dwt ultramaxes already equipped with scrubbers from Nautical Bulk Holdings in August "at installation cost", he said.
The company also acquired two 2016-built, scrubber-fitted ultramaxes of the same size during the fourth quarter for a total outlay of $123m.
New York-listed Eagle Bulk, which will have fit 41 out of its 50 ships with scrubbers at $2.25m each through March, has hedged against any loss by buying 10% of expected 2020 fuel use at $240 per metric tonne on the forward market.
During the call, Vogel told analysts that the spread between very-low sulphur fuel and high sulphur fuel oil has averaged at $325 per tonne so far in January.
The company's focus on scrubbers has put it in a small club.
Some 7% of the global fleet of supramaxes and ultramaxes is fitted with scrubbers, and that figure will rise to just 10% by the end of the year.
Vogel said the company has long held the view that the fuel price spread would be widest at the outset of IMO 2020 and then would shrink over time.
"We believe that to miss out on the early days of 2020 would be a lost opportunity," he said.
