The West’s concerted decision to isolate Russia from global financial affairs may be a good thing for dry bulk shipping, market experts said. The US and its allies on Sunday blocked certain Russian banks’ access to the SWIFT international banking system in response to the country’s invasion of Ukraine. SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, allows 11,000 financial institutions worldwide to conduct international trade with each other.

Exclusion from the network could cripple Russian exports of grain and coal and boost demand for the smaller bulkers, said John Kartsonas, founder of Breakwave Advisors, which runs a dry bulk-focused exchange-traded fund. “This is quite contrarian, as most analysts see the lack of cargo as lower demand,” he told TradeWinds. “However, these cargoes are not discretionary and in very high demand, so we believe it will create the opposite effect of a higher freight rate market. Now, I believe, a scramble to find substitute cargoes, especially for grain, will lead to more disruptions and complicated trade patterns, thus being supportive of dry bulk freight.”

But Clarksons Platou Securities pointed to reports suggesting severe disruptions to Russian commodities trade flow because it will be harder for banks to issue letters of credit. “This could be problematic for dry bulk markets in the short term, given the sheer size of the exports from the Black Sea,” said analysts at the investment bank, which is controlled by shipbroking giant Clarksons. On Monday, the supramax 10TC, a spot-rate average across 10 key routes, ticked up 0.5% to $26,711 per day on Monday, while the handysize 7TC gained similarly to $25,296 per day. But the dry bulk futures market showed short-term confidence in these sectors by displaying better rates over the next few months, despite the Russia-Ukraine conflict. April forward freight agreements (FFAs) for supramaxes hit $29,208 per day and May contracts achieved $28,150 per day after both gained ground on Monday. June FFAs rose 2.6% on Monday to $27,342 per day, according to Baltic Exchange data.

Handysize FFAs into June were also higher than physical spot rates after they all improved on Monday. April FFAs came in at $27,438 per day, while landing at $26,750 per day for May contracts and $26,125 per day for June. Physical and FFA rates for capesizes and panamaxes both slid on Monday, but paper markets are still pointing to better rates over the next few months.

Eric Priante Martin contributed to this story.