Star Bulk’s loss narrower than forecast as fleet size increases

Star Bulk said 104 of its ships will have scrubbers by the end of the year. Through July, 43 scrubber towers have been installed on its ships.

Rates are looking better as Brazil’s iron ore exports are resuming. Star Bulk said its average freight rate for the third quarter was $14,420. 

The company’s actual loss was $0.44 per share, or roughly $40 million for the quarter. Most of the actual loss was the result of Star Bulk moving up the periodic inspection and maintenance of vessels from 2020 to the second quarter of 2019, accelerating $19 million in dry docking costs. 

The vessels were at shipyards at the time being fitted with sulfur scrubbers. Star Bulk completed its dry docking surveys concurrently with the scrubber installations, so as to have fewer off-hire days in 2020. 

Star Bulk said dry bulk growth of 2.8 percent is running ahead of 2.2 percent growth seen at the same time last year. The supply of newbuilding vessels on order stands at 11 percent of the current global fleet. 

But many of those newbuilding will take the place of vessels 15 years or older, which make up 15 percent of the world fleet. Those vessels will likely be scrapped due to the pending change in marine fuel rules to lower sulfur limits. Star Bulk said the IMO 2020 rule is expected to limited dry bulk shipping supply through 2021. 

This year is seeing dry bulk volume growth of 1.2 percent, which is down from the 2.6 percent growth it saw last year. 

Star Bulk blamed the decrease on disruptions in iron ore shipments from Brazil and Australia, China’s restrictions on coal imports, and the decline in U.S. grain shipments to China. 

But it said low iron ore stockpiles in China and an increase in soybean exports from Brazil should help the market move higher in the second half of 2019.