Shipowners are refusing to sail to the Black Sea following attacks on vessels including bulk carriers and major shippers are declaring force majeure at their production facilities in Ukraine. Both factors have complicated the immediate outlook for bulker markets. Conflict in Ukraine has plunged the supramax market in the eastern Mediterranean into turmoil. Whereas tankers have been earning premia for trips to the Black Sea, bulker owners are largely refusing to go to the region at all, TradeWinds has heard.

Rates for supramax trips from the Black Sea to Asia plunged by 5% on Friday. The benchmark route from Canakkale in Turkey to China-South Korea via the Mediterranean or Black Sea was assessed at $28,979 per day, which is $1,471 lower than on Thursday. Grain business in the Black Sea has been at seasonally low levels, but the outbreak of conflict this week has made matters much worse for bulker demand in the region. Market sources said they expect news of the attacks on bulk carriers in the Black Sea to all but end grain business in the region for the time being.

Danish owner-operator Norden said it has vessels in the Black Sea but did not get into specifics as to how they are being affected by the conflict. “We are keeping a close eye on the situation as we currently have several vessels in the region including two chartered vessels in Ukrainian ports,” Norden said. Aside from cargoes from Ukraine, Russia and the Black Sea, market sources said supramax demand was holding firm with many owners out to book March cargoes. The weighted average of supramax spot rates across 10 key routes was assessed $20 higher on Friday to $26,587 per day. This is the assessment’s highest level since the end of December.

The most dramatic slide in freight rates was seen in the capesize market, where average rates slid by 15% on Friday. This continued the dip seen the previous day, which Baltic Exchange analysts called “less of a move on market fundamentals and more a reflection of global tensions”. The 5TC weighted average of spot rates across five key capesize routes was assessed on Friday at $14,026 per day, down by $2,560. Freight-rate assessments were down across all the Baltic Exchange’s benchmark routes. Worst affected was the China-Japan transpacific round voyage, which saw $6,088 wiped off its assessment. Panelists put the route at $11,154 per day on Friday. Brazilian miner Vale was reported on Thursday to have fixed an unidentified capesize for a trip from its Ponte de Madeira terminal to Rotterdam earlier this week at a rate of $10.50 per tonne, loading in mid-March. This is Vale’s first reported fixture for iron ore since 25 January, signaling the miner’s return to the market following the rainy season in Brazil. Michael Gardiner, chartering manager for Vale, told TradeWinds the miner is “optimizing” its fleet by controlling vessel speeds and making careful port selections. “From the Vale side, we remain in the sidelines, having made a concerted effort to optimize our dedicated fleet of around 150 ships,” he told TradeWinds on Friday. “Moving into Q2 [second quarter], any chartering activity will be focused around optimizing berth efficiency.” Average panamax spot rates fell by $282 on Friday, following a dip in rates on routes originating in Europe and the Mediterranean. The weighted average of panamax rates across five key routes was assessed at $23,922 per day. Dry freight derivatives looked a little better on Friday with bids rising higher, but not enough to reverse the effects of the dramatic route seen on Thursday, which hit front-month contracts especially hard.

Railways and ports in Ukraine have ground to a halt, which has forced major exporters to halt production in the country. Miner and iron ore pellet producer Ferrexpo declared “force majeure” at its production facilities in Ukraine on Friday, according to a statement. Ferrexpo said its operations have also been hampered by a shutdown at the capesize terminal at Pivdennyi in the Ukrainian port of Yuzhny. Market sources said the iron ore pellet market will be directly affected by the drop in Ukrainian volumes but said the effects may be offset by stems of high-quality sinter feed from elsewhere. Ukrainian steelmakers Metinvest and ArcelorMittal Kryvyi Rih have also suspended operation at their steel production facilities, which would affect demand for any supramaxes and handysizes willing to call in the country.