Shipowner SFL ups its scrubber count again

New York-listed shipowner Ship Finance Limited (SFL) has increased the number of ships it will install scrubbers on from 29 to 36 to prepare for International Maritime Organization (IMO) 2020 sulphur regulations.

The company said it will install scrubbers on seven of its Capesize bulkers on charter with dry bulk operator Golden Ocean in exchange for higher time charter rates.

This is at least the second time SFL, owner of 92 ships including dry bulkers, tankers, containerships and others, has revised its scrubber count upwards.

Shipowners are able to charge higher time charter rates on scrubber-fitted ships because of the fuel cost savings for the charterer that come from continuing to burn high sulphur fuel. Discounts of high sulphur fuel compared with IMO 2020-compliant low sulphur fuel are widely expected to steepen next year as demand for high sulphur fuel plummets with the 1 January implementation of the IMO regulation. In time charters, unlike voyage charterers, the charterer is typically responsible for bunker fuel payments.

Globally, around 3,000 ships are expected to be fitted with scrubbers by the beginning of next year.

SFL pointed to IMO 2020 as one of the factors that is putting upward pressure on shipping rates by temporarily removing capacity.

"[Oil] transportation demand is forecasted to increase and capacity continues to be impacted by temporary reductions in vessel supply as owners prepare for the upcoming implementation of IMO 2020 and by some capacity being utilized for floating storage," SFL said.

The dry bulker market is also benefiting from temporary IMO 2020-related supply reductions, as well as from rising iron ore trade volumes, said SFL.

SFL earned a profit of $3.8mn on revenues of $111.5mn in the third quarter, compared with a profit of $29.7mn on revenues of $111mn in the same quarter last year. The year-on-year profit decline was partially the result of a $25.9mn impairment charge in the third quarter.

By Nicholas Watt