Scorpio Axes Nine-Month Loss on the Back of Trade War Aftermath

Monaco-based bulker owner and operator Scorpio Bulkers managed to shrink its loss in the third quarter of this year to USD 0.4 million, substantially down from USD 10 million reported in the same period last year.

For the nine-month period Scorpio cut its loss from last year’s USD 58.7 million to USD 5.3 million as it reaped fruits from vessel demand spurred by the ongoing trade war between China and the United States.

Namely, revenue of the company’s Ultramax vessels increased by USD 16.6 million year-on year to USD 39.7 million in Q3 due to strong South Atlantic grain activity, as U.S. tariffs caused Chinese buyers to continue buying large quantities of soybeans from the East Coast South America market extending the usual second quarter grain activity. In addition, strong coal demand from China benefited rates.

Scorpio’s Kamsarmax vessels saw a revenue increase of USD 7.2 million from last year’s USD 15.5 million as a result of a sustained grain import program from China. With trade war narratives escalating this summer, Chinese mills were making sure they purchased as much grain as they could from other origins notably the East Coast South America market. This coincided with the increase in Indian demand for coal from all origins, especially South Africa, Scorpio explained.

Total vessel revenues for the first nine months of 2018 were USD 177.3 million, an increase of USD 66.2 million year-on-year.

“Despite the negative macroeconomic noise, such as trade wars and sanctions, Ultramax Operations and Kamsarmax Operations have remained resilient in the steadily rising markets and both were able to take advantage of premiums in the Atlantic driven by the strength of the fronthaul market from East Coast South America and the Black Sea to China and South East Asia, respectively, as well as the tightening of supply,” the company said.

The results are being reported on the back of a major refinancing campaign of the company and a substantial investment in scrubber technology ahead of the IMO’s sulphur cap set to enter into force in 2020.