Maritime: Jefferies favours scrubber-equipped vessels in high fuel cost environment

Eagle Bulk Shipping

04/03/2022 08:57

** On Maritime stocks, Jefferies favours scrubber-equipped
vessel owners over spot operators in a rising bunker fuel cost
environment, as the Brent price peaks following sanctions on
Russia and general geopolitical uncertainty
    ** "Bunker fuel prices have been on the rise since bottoming
in the summer of 2020, but have accelerated rapidly to new
record highs as global oil prices are now over $110/bbl," it
says
    ** Jefferies indicates the very low sulphur fuel oil (VLSFO)
price is up 35% in 2022, and its fuel spread with High Sulphur
is now above $200/MT
    ** It expects the fuel spread to remain high despite U.S.
sanctions on Russian oil exports and the strong diesel market 
increasing prices
    ** Hence, the broker sees scrubber-equipped vessels owners
benefiting the most from this spread, citing "rising spot
charter rates should help offset" rising bunker costs
    ** Jefferies says the best positioned in this context are
Monaco-based Scorpio Tankers  STNG.N , Greek Star Bulk Carriers
 4FAP.F , and U.S. Eagle Bulk Shipping  EGLE.O , thanks to dry
bulk rates' continued improvement and great operational exposure
    ** It also cites Genco Shipping  GNK.N , Frontline  FRO.OL ,
Safe Bulkers  SB.F , and International Seaways  INSW.N  among
the beneficiaries
    ** However, spot operators seem more exposed to rapid price
hikes in the short run, Jefferies says, adding shipowners with
more time charter coverage will be insulated from rising bunker
prices as the charterer, not the owner, is responsible for fuel
costs during the charter period
    

 (Reporting by Dina Kartit; editing by David Evans)
 ((E-mail dina.kartit@thomsonreuters.com))