Scorpio Bulkers Places $1.2 Billion Order Like It’s No Big Deal

Updated: January 12, 2014 (Originally published January 6, 2014)

In an emailed statement this morning that didn’t include any executive commentary, Scorpio Bulkers Inc. (NYSE: SALT) announced $1,171 million in newbuilding contracts for twenty Capesize and two Kamsarmax bulk carriers. The ships and the builders are listed below:

YARD                                                     DWT       Delivery 
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q1-15   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q2-15   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q3-15   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q4-15   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q1-16   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q2-16   
Shanghai Waigaoqiao Shipbuilding Co., Ltd              180,000      Q3-16   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q2-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q3-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q3-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q3-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q4-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q4-15   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q1-16   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q1-16   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q2-16   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q2-16   
Sungdong Shipbuilding & Marine Engineering Co., Ltd    180,000      Q2-16   
Daewoo Mangalia Heavy Industries S.A.                  180,000      Q1-16   
Daewoo Mangalia Heavy Industries S.A.                  180,000      Q2-16   
Hudong-Zhonghua (Group) Co., Ltd                       82,000       Q1-16   
Hudong-Zhonghua (Group) Co., Ltd                       82,000       Q2-16

In a phone call this morning with Jonathan Chappell, Managing Director at Evercore Partners he wasn’t surprised at all by Scorpio’s move.

“It’s their MO. Following their IPO last month they have the access to capital and appear to be doing the same thing with Scorpio Bulkers that they did with Scorpio Tankers.”

Will the dry bulk market of 2015 and 2016 have the demand to support 3.4 million dwt in additional capacity?

Jay Goodgal from Castalia Advisors says no in his November 26 editorial, “Too Many Bloody Ships.” He writes: “With bulk carrier newbuild deliveries combined with the “shadow” supply of tonnage, the world dry bulk fleet will have over 32 percent in excess fleet capacity over the next few years depending upon market circumstances.”

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