New York-listed Eagle Bulk Shipping typically doesn’t like to charter out its vessels but has made a lucrative exception for a bulker that benefited from both its exhaust-gas scrubber and war-driven market disruption in the Black Sea. Eagle chief executive Gary Vogel told equity analysts on an earnings call on Friday that the 64,000 Stockholm Eagle (built 2016) had been fixed to an unidentified charterer for between five and seven months at a robust $36,500 a day. The disclosure surprised analyst Magnus Fyhr of HC Wainwright, who questioned why a user would lock in a rate that is above current spot assessments around $27,000 per day. “That’s a scrubber-fitted ultramax and the benefit of the scrubber is over $3,000 per day —even greater in Singapore. It’s in the Far East where rates are really pushing up. There’s a lot of strength in the Pacific on dislocation from what’s going on in Ukraine,” Vogel told Fyhr.

Eagle typically uses paper contracts, or FFAs, to hedge against volatility in spot rates. “It’s five months to seven months. We usually don’t like to relet our ships because of that optional period. But when the rate is such that we can lock in this type of cash flow, it’s a better tool than FFAs,” Vogel said. Widening fuel spreads between low sulphur fuel oil (LSFO) and the cheaper high sulphur fuel oil (HSFO) used by 90% of Eagle’s fleet have continued to ramp up in recent weeks, with the current gap of $235 per tonne reaching a two-year high, Vogel said. This has offered a turbo boost to Eagle’s benefits from a spot market that is already firming off lows seen in January, which is typically the weakest month for dry rates.

Jefferies analyst Randy Giveans said in a client note on Friday that Eagle is one of the top three US-listed owners set to benefit from the trend, along with bulker peer Star Bulk Carriers and product tanker owner Scorpio Tankers. Fyhr asked Vogel whether Eagle is preparing to capitalize on the current spread with paper hedges over the remainder of 2022, much as it did in 2020 when the IMO 2020 sulphur cap regime took effect. Noting that the forward spread is expected to drop to $165 per tonne for the remainder of the year, Vogel added, “It’s something we’re looking at. You could see us start to layer in some spreads and hedges.” Vogel said 93% of Eagle’s competitors in the ultramax and supramax sectors do not use scrubbers. The Eagle boss said it is too early to tell how the market will be influenced by disruption from Russia’s invasion of Ukraine, but there were early signs of rates benefit through greater tonne miles. Eagle in recent days has fixed two coal cargoes from Indonesia to Europe at about $32,000 a day, he said. “It’s the first time we have moved coal from Southeast Asia to the continent — that involves some pretty long tonne miles,” he said.