Monday, 24 February 2020

Diana Shipping: Scrubbers not 'attractive investment'
By Michael Juliano, TradeWinds

Diana Shipping does not consider buying exhaust gas scrubbers to meet IMO 2020 compliance a safe bet for the money.

"Why not buy a windmill or a real estate plot of land somewhere?" chief strategy officer Ioannis Zafirakis said during today's third-quarter earnings call with analysts.
He said shipowners who consider buying the devices costing at least $2m each need to look closely at the exact costs and expected returns.

"We have done that ourselves now and do not see it as an attractive opportunity investment-wise," he said in response to a question from Jefferies analyst Randy Giveans.
"At the moment, we think buying back our stock has much better return possibilities than investing in scrubbers."
The Simeon Palios-led company last week announced plans to buy back almost 4% of its stock.

Zafirakis said some are confusing scrubber installations as compulsory as IMO-required ballast water treatment systems.
"It's an investment to possibly enhance your returns accepting a specific risk by investing a certain amount," he said.

"Scrubbers are an investment where we have to make various assumptions to see something that is going to produce a nice reward ratio for our use of cash."
He said those assumptions include the expected fuel price spread between high sulphur fuel oil and marine gas oil, fuel availability, technical issues and at what charter rates.
"All of these are assumptions that someone should take to see a specific return if everything goes the way you expect," he said.

"At the moment, we do not see ... this possible return as an investment."

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