Danish bulker operator Ultrabulk says the war in Ukraine is pushing up demand for ships as commodity users stock up on materials. The company reported record earnings for 2021 on Tuesday and forecast that market fundamentals for dry bulk remain strong due to a low orderbook and positive economic conditions. Ultrabulk chief operating officer Hans-Christian Olesen told TradeWinds that consumption of raw materials and grain are not likely to fall in the immediate future amidst a rush toward “commodity grabbing. We are seeing our customers out there securing that their factories and smelters can get the minerals that they need to keep their production up because their customers want the products,” he said.

With food, commodity and fuel prices rising, many buyers are rushing to purchase materials and transport them to production facilities, Olesen said. Far Eastern markets are particularly high, but the Atlantic is getting a direct impact from the Russia and Belarus sanctions, he added. “So, we are seeing a very split Atlantic and Pacific,” Olesen said. But he said fewer than expected ships are moving in ballast to reposition themselves for well-paid voyages due to marine fuels hitting prices of $1,000 per tonne. “It’s a big decision to ballast 20 or 30 days in this current [fuel price] environment,” he said. However, purchasing managers are under pressure to make decisions about stockpiling raw materials to prevent production closures. “Sometimes stockpiles increase when the world is not at ease because everyone wants to protect their supply.”

Ultrabulk forecast a net result in the range of $40m to $80m for 2022. It recorded a gain of $75m for last year, compared to a loss of $16m in 2020. Olesen added: “Like the rest of the world we are watching anxiously where is this war going to take us. Could it escalate out of control? We hope not, especially for the people involved. But for the dry bulk trade we are quite positive if the war does not send us into negative growth rates which then drags the whole economy down.”