Scorpio Tankers sells LR2 quartet, orders MRs as it moves to clear debt by 2028

Scorpio Tankers has agreed to sell four LR2 product tankers for US$285.8M and acquire two newbuilding MRs for US$92.5M as part of an accelerated fleet renewal and debt-clearance strategy.

The NYSE-listed owner will dispose of the 2014-built LR2s STI Broadway and STI Condotti, and the 2015-built STI Winnie and STI Lauren. These sales are expected to close in Q2 or Q3 2026.

Simultaneously, Scorpio has signed a letter of intent to purchase two scrubber-fitted MR product tankers for US$46.25M each. The vessels are scheduled for construction at the Jiangsu Yangzi-Mitsui Shipbuilding joint venture in China, with delivery slated for Q1 2030.

Following these latest S&P deals, Scorpio intends to repay all outstanding secured debt due in 2028. The company plans to make early, unscheduled repayments totalling US$367.8M across several secured credit facilities, including a previously announced US$10.7M payment. The loans originate from multiple 2023 credit lines. Scorpio also plans to cancel the unused portions of two revolving credit facilities.

Strong Q1 performance amid soaring TCE rates

For the three months ended 31 March 2026, the company posted a net income of US$216.3M, up by 271.6% from US$58.2M recorded in Q1 2025. The near-fourfold rise was primarily driven by a spike in time charter equivalent (TCE) revenue.

Despite operating a smaller average fleet, which was down to 91 vessels from 99 in the prior-year period, overall TCE revenue rose by US$98.8M to US$303M. The daily average TCE rate per vessel climbed to US$37,697, up from US$23,971 in Q1 2025, reflecting a significantly stronger product tanker market.

Scorpio attributed the robust start to the year to firm refined product demand and a tight supply-demand balance. Spot rates were further bolstered by geopolitical disruptions in the Middle East, which curbed regional exports and forced buyers to source cargoes from more distant markets. The resulting increase in tonne-mile demand and fleet dislocation more than offset lower volumes.

Total vessel operating costs fell by US$1.8M to US$68.8M, reflecting the net sale of ten units since March 2025. However, daily opex per vessel rose to US$8,355 (up from US$7,924 in Q1 2025), primarily due to the timing of spares and stores purchases for the MR fleet.

S&P and chartering activity

During the first quarter, Scorpio maintained high liquidity through active vessel divestments and strategic chartering plays.

In February 2026, the company declared options for two scrubber-fitted LR2 newbuildings at Dalian Shipbuilding Industry Co (DSIC) in China for US$68.5M each, with deliveries scheduled for the second half of 2029.

This was followed in March by the securing of long-term employment for two existing LR2s. The shipowner fixed STI Lombard on a five-year charter at US$33,000 per day, while STI Rambla was committed for eight years at US$30,500 per day.

The company’s broader divestment programme also gathered pace. In March, Scorpio agreed to sell eight vessels for an aggregate of US$305M. This package comprised the 2015-built LR2 STI Solidarity for US$60M, four 2015-built MRs for a combined US$140M, and three 2014-built MRs for a combined US$105M. The sales momentum continued into April, when a deal was struck to sell three 2014-built LR2s, STI Park, STI Sloane, and STI Madison, for a combined US$195M, with transactions expected to close in the second quarter of 2026.

These agreements build on a busy first quarter, during which Scorpio finalised the sales of four scrubber-fitted LR2s for a combined US$223.3M. The disposals included the 2019-built STI Lavender for US$61.2M, the 2016-built sister ships STI Goal and STI Gallantry for US$52.3M each, and the 2015-built STI Kingsway for US$57.5M.

Following these transactions, Scorpio’s owned fleet stands at 83 product tankers, comprising 32 LR2s, 37 MRs, and 14 Handymaxes, with an average fleet age of 10.2 years.