A fourth ship has reportedly been attacked in the Black Sea in an incident involving a bulker owned by the Bangladeshi government. Dryad Global said on Wednesday that the 38,894-dwt Banglar Samriddhi (built 2018) was struck by a missile at 5:25pm local time (1525 GMT) while anchored at Olvia, more than 100 km from Odessa. None of the crew members, all said to be Bangladeshi, were injured and video circulating social media appears to show the ship’s superstructure on fire. “Dryad Global advice that any vessel currently within Ukrainian Ports should seek to leave immediately if deemed safe to do so,” the maritime security consultancy said. “Vessels should ensure they are broadcasting on AIS and clearly state their intentions across VHF. Any vessels challenged by Russian military vessels should comply fully with instructions.”

The Banglar Samriddhi’s owner and manager is listed as Bangladesh Shipping Corp. The state-run company has been approached for comment. If confirmed, this attack would be the fourth on commercial ships in the Black Sea since Russia’s invasion of Ukraine began. Last Thursday, the 61,100-dwt bulker Yasa Jupiter (built 2019) had its windows blown out by what the owner described to TradeWinds as either a shell or a missile. The next day another bulker, the 85,065-dwt Namura Queen (built 2020), and the 2,200-dwt bunker tanker Millennial Spirit (built 1974) were struck with missiles. The Millennial Spirit attack was confirmed by Moldova, the ship’s flag state. Officials said that two of its 10 Russian crew members were seriously injured and that Ukrainian rescue crews had responded. In addition to the four attacks in the Black Sea, Ukraine accused Russia of seizing two ships in the Sea of Azov while Russian state-run media said another two were attacked by Ukrainian in the same waters. Security sources told TradeWinds that it was unlikely Ukraine carried out the attacks.

Ukraine’s ambassador to the United Nations, Sergiy Kyslytsya, accused Russia of carrying out both attacks while addressing the General Assembly during an emergency session on Tuesday. He said Russia had violated international law in the attacks. On Wednesday, Nato issued a warning to commercial ships, telling them to stay clear of military vessels and beware of mines, automatic identification system manipulation and cyber-attacks. Navigation warnings highlighted by the military alliance include stretches of water near Odessa in the northwest Black Sea, near the Ukrainian shoreline along the Sea of Azov and a large swathe of water just outside the Kerch Strait. “Shipping is encouraged to stay in close contact with national and local maritime authorities,” the Nato warning read. “Shipping should … thoroughly document any incidents and report these via their respective national channels and to the local maritime authorities.”

The unfortunate events in eastern Europe are destined to affect shipping demand. For dry bulk, we believe the events should translate into an increased risk of volumes declining, most notably grains, where more than 15% of global shipped volumes are sourced from the Black Sea. However, a shift in sourcing to further afield could offset the volume loss and be positive from a tonne-mile demand perspective. Moreover, the continued strain on energy markets bodes well for coal’s prospects in the coming years. Still, the elevated uncertainty and inflationary pressure are likely to curb the outlook for underlying growth, which suggests a negative impact for dry bulk demand, all else equal.

European coal-to-gas switching prices now indicate that it will not be profitable for power plants to switch from coal to gas before April 2024, extending out from Q2 2023 last month. The gas supply crunch experienced by Europe this winter has been compounded by Russia’s invasion of Ukraine, in which sanctions may hamper Russian gas exports to Europe. Dutch TTF natural gas prices have increased by 54.8% MoM to €117.8/MWh as tensions have escalated in eastern Europe, although this remains 35.4% below recent highs in December.

While thermal coal prices in Europe have also increased by 50% since January, it’s profitability relative to natural gas has still improved. With Western Europe’s current energy insecurity, however, some governments are reconsidering their coal phase out policies. Italy, for example, has stated that they will reopen coal plants if necessary while France has lifted caps on coal power.

Although the ongoing situation in Ukraine is highly unpredictable, any potential sanctions on Russian energy resources would likely increase the scope for European coal imports going forward.

The Port of Brisbane has been closed to all ship movements following heavy rains and flooding in the region, with vessels also directed to exit anchorages off the ports of Newcastle and Port Kembla. While Brisbane is an important container port, the impact of the closure for dry bulk shipments will be minimal. The ports coal terminal is far smaller than others in the region, loading 3.2 MMT over the last 12 months. This was less than 1% of Australia’s total coal shipments over the same period.

Over the last few months, the port has become an increasingly significant wheat export hub, loading 233,000 tons in February. This is, however, still only 9% of Australia’s total wheat exports last month.

More significant disruptions to coal supplies may occur as the weather system moves further south as it approaches the larger coal terminals. Heavy rains may also cause flooding at coal mines across Southern Queensland, many of which are already heavily saturated. As a result, queues off the port of Newcastle have declined by 34.3% WoW to 1.7 MDWT.

More than 300 merchant vessels are waiting to enter and exit the Black Sea amid Russia’s continued attack on Ukraine. There are 110 ships that have gathered outside the Bosphorus Strait in the Sea of Marmara, up from 50 vessels five days ago, according to VesselsValue data. “Vessels waiting at the southern entrance of the Bosphorus Strait destined for the Black Sea may fear consequences of transiting when the environment the other side remains hostile,” trade flow analyst Peter Williams told TradeWinds.

Turkey on Monday activated powers under an international treaty that allows it to effectively block Russian warships from crossing the Bosphorus. The move comes one day after Turkish foreign minister Meylut Cavusoglu formally labelled the Ukraine conflict as a war. More than 200 vessels — mostly small bulkers and tankers —wait at the mouth of Kerch Strait in the northern Black Sea, data showed, as Russian naval forces block the Sea of Azov from commercial vessels. Russia is letting ships leave the Sea of Azov and enter the Black Sea, according to insurer Gard. “Around 50% of these waiting vessels are reporting laden,” Gard said. Russia is also prohibiting vessel access to the Black Sea’s northwestern region, which is home to Odessa, Ukraine’s largest port. “There are reports of mines being laid in the northwestern part of the Black Sea near Ukrainian shores,” Gard said. Gard recommended that area vessels look out for the latest warnings on mined areas and contact local port authorities and ships agents for information.

All Russian ports are operating “in a routine manner”, but the International Maritime Organization has elevated its International Ship and Port Facility Security Code to level two. “If cargo operations at Russian ports in the Black Sea are absolutely necessary, it is recommended that a declaration of security is first carried out with the port facility security officer,” Gard said. Commercial operations within the exclusive economic zones of Turkey, Georgia, Bulgaria and Romania remain unaffected at this time, the insurer added. Last week, Ukraine shut down Black Sea and Azov Sea ports of Odessa, Chernomorsk, Pivdenny (Yuzhny), Nikolaev, Dneprobugsky, Berdyansk and Mariupo.

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.

Jinhui Shipping and Transportation posted a huge jump in profit last year as it didn’t repeat vessel impairment losses it had booked during 2020. The supramax specialist reported a net profit for 2021 of $194.2m against a loss of $15.25m seen in the previous financial year, according to figures released on Monday. Jinhui’s 2020 result included $133.6m in impairments.

Non-accounting items, however, helped drive profitability as well. Operational revenue surged by 178% in 2021 to just over $131m, as the company benefited from strong freight markets and an expanded fleet. Jinhui said its vessels saw their average daily time charter equivalent (TCE) rate improve 165% year-on-year to $19,233 against the $7,269 seen in 2020. “The consolidated net profit for the year was mainly attributable to the remarkable rebound in dry bulk shipping market as seaborne trade activities gradually recovered since late 2020 and the increase in number of owned vessels that led to a significant increase in the chartering freight and hire revenue for the year 2021,” Jinhui said.

For the fourth quarter of 2021, Jinhui’s net profit was $84m against the $7.5m seen 12 months earlier. Revenue was up 181% year-on-year to $42.6m. During the year, Jinhui entered into agreements to acquire eight vessels worth over $110m. To date it has taken delivery of six of them. The shipowner said it has not ruled out further vessel acquisitions, given the remarkable rebound in the dry bulk market. At the end of the year, the fleet stood at 24 dry bulk vessels comprised of 22 grabs-fitted supramaxes and two post-panamaxes.

“2021 has been a good year for dry bulk shipping with robust freight rates driven by a general increase in demand for commodities worldwide, increase in logistics complexity due to procedures to battle the pandemic as well as limited new vessel supply,” Jinhui said. “As we entered 2022, there has been some corrections in the freight market in recent weeks, affected by multiple issues from seasonal trading patterns, decrease in industrial activity during the Beijing Olympics, volatility in commodity prices, to continued disruptions in global supply chains.”

Looking ahead, Jinhui said it expected few newbuilding orders, as there is no consensus in the industry yet with regards to the next-generation engine design to reduce carbon emissions. “This potentially highly favorable demand and supply dynamics is expected to continue, where our fleet is well positioned to benefit,” it added.

Russian exports of crude, LNG and agricultural products face severe disruption after the US and its allies moved to block certain Russian banks’ access to the SWIFT international payment system. SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates rapid cross-border payments, transferring trillions of dollars a year. Created in 1973 and based in Belgium, SWIFT links 11,000 banks and institutions in more than 200 countries and has become the principal mechanism for financing international trade. European Union (EU) officials speaking on Sunday didn’t clarify exactly which Russian banks will be excluded from SWIFT. EU foreign policy chief Josep Borrell said the measure would apply to “a certain number” of Russian banks, with a view to “effectively cripple” the country’s financial market.

Ursula von der Leyen, the president of the EU’s executive commission, said the world should be in no doubt about the scope of the measure. “This will stop their exports of products from mineral fuels to tobacco, wood and timber, cement, iron and steel,” she said. The EU also said it was taking measures to block about half of the Russian central bank’s foreign exchange reserves that are currently parked in G7 countries and the total amount of which is estimated at about $630bn. Analysts said the move would deal a blow to Russia’s economy, but also hurt the West with a spike in prices and inflation.

Russia is the third largest seaborne exporter of coal in the world, accounting for 15% of global supply, it is the second largest seaborne exporter of crude oil in the world, with a market share of 11%. It is also the fourth largest seaborne exporter of LNG in the world, accounting for 8% of global supply, according to Banchero Costa’s Singapore-based head of research, Ralph Leszczynski. According to S&P Global Platts, about 48% of Russian crude and condensate exports are going to western European countries, primarily the Netherlands, Germany, and Poland, and 42% to Asia, mostly to China. European countries account for 72% of Russian natural gas exports. “While trying to exempt energy transactions, SWIFT can still cause significant disruption to energy trade flows in the near term, at least until buyers switch to alternatives like Telex or other systems,” Amrita Sen, co-founder of the Energy Aspects think-tank told Reuters. “On other commodities – I can’t see how trade continues without the exemptions,” she said.

Russian energy and commodity flows to Asia, especially to China, will likely continue, according to analysts. Both China and Russia have been developing alternatives to SWIFT. Beijing has been encouraging the use of its homegrown alternative, known as the CIPS clearing and settlement services system, while Moscow has set up its own banking messaging system, known as SPFS, reported Reuters. Iran was banned from SWIFT in 2012, as part of sanctions over its nuclear program. It lost almost half of its oil export revenues and 30% of foreign trade. On Sunday oil majors bp and Norway’s Equinor both announced that they would be exiting investments in Russia. The UK oil major said it will exit its shareholding in Rosneft. It has held a 19.75% shareholding in Rosneft since 2013. Additionally, bp chief executive Bernard Looney is resigning from the board of Rosneft with immediate effect. The other Rosneft director nominated by bp, former bp group chief executive Bob Dudley, is similarly resigning from the board.

At the same time, Equinor said it has decided to stop new investments into Russia, and to start the process of exiting its Russian Joint Ventures. “In the current situation, we regard our position as untenable,” Equinor chief executive Anders Opedal said in a statement. “We will now stop new investments into our Russian business, and we will start the process of exiting our joint ventures in a manner that is consistent with our values.” Equinor has been in Russia for over 30 years and entered a cooperation agreement with Rosneft in 2012.

Turkey’s foreign ministry formally labeled the Russian-Ukraine conflict as a war, opening the way for the government in Ankara to restrict moves of Russian war vessels through the Bosphorus. Turkish foreign minister Mevlut Cavusoglu said in an interview with CNN Turk on Sunday that the situation in Ukraine had turned into a full-blown war and that his country would therefore “transparently implement all the provisions” of the Montreux Convention — the international treaty that governs ship traffic through the Straits.

According to article 19 of the Convention, war ships belonging to belligerent powers shall generally not pass through the straits, except when returning to their bases. “Article 19 is pretty clear,” Cavusoglu told CNN. Turkey’s foreign ministry experts had examined the question after a request by the government in Kiev last week to block Russian ship moves through the Turkish Straits because of Moscow’s invasion of Ukraine. Cavusoglu had initially reacted lukewarm to Ukraine’s request on Friday. On Saturday, however, after a telephone conversation with his Turkish counterpart Recep Tayyip Erdogan, Ukrainian president Volodymyr Zelenskyy tweeted that Turkey would block Russian war vessels. The Turkish government didn’t directly confirm Zelenskyy’s statements and hasn’t made any formal declaration about invoking article 19 of the Montreux Convention yet. Any such move isn’t expected to directly affect merchant shipping.

Under Montreux, commercial vessels enjoy almost complete freedom of passage and navigation in the straits — even when Turkey itself is at war or considers itself to be imminently threatened by war, on condition that they do not belong to, or assist, a state that Turkey considers an enemy. The Turkish Straits consist of the Bosphorus, the Sea of Marmara and the Hellespont strait further south. Being Russia’s only gateway from the landlocked Black Sea to the Mediterranean Sea and beyond, they are a potential chokehold for the country’s navy. Their importance for Russia is highlighted by the fact that Moscow is the Straits’ biggest military user by far. According to the latest available full-year report on the Montreux treaty’s implementation, Russia alone accounted for 62% of the 214 navy vessel crossings registered in 2019.

The United States, the next biggest military user of the Turkish Straits, accounted for just 10% of all crossings. Ukraine, which is Russia’s adversary and has a tiny navy with a minimal capacity to project power outside its own waters, didn’t perform a single passage in that year.

The Bosphorus plays a smaller role for Russian commercial vessels. Nearly 40,000 ships transit the Bosphorus each year and Russian-flagged ships account for less than 10% of that. However, the gateway is hugely important for the Russian crude oil and tanker business carried on vessels flying other flags, mainly Malta’s, Liberia’s, Panama’s or of the Marshall Islands. The Montreux treaty has stood the test of time well since it was adopted in 1936 and Turkey would be loath to be seen to violate it.

The shipping and international communities cherish the Montreux regime so much, that observers even raised concerns last year that Turkish plans to build an artificial waterway parallel to the Bosphorus might undermine it. Turkish officials, however, dismissed such fears. Montreux rules would continue to apply for the new $10bn project dubbed Istanbul Canal, they said.

Any illusions for a peaceful resolution in the current Russo-Ukrainian conflict evaporated on the 24th of February, as Russia’s invasion of its Eastern-European neighbor began in earnest. Whatever the outcome, shipping markets will be significantly impacted with the threat to Dry Bulk from the dislocation of the important Ukrainian trade. In the short-term all Ukrainian ports have ceased operations, stranding several vessels in port, whilst two dry bulk vessels, an Ultramax and a Kamsarmax, have been hit and damaged by missiles.

Looking at the bigger picture, in 2021 Ukraine was responsible for approximately 100 MMT of Dry Bulk export trade numbering around 2,200 voyages, principally in grains, steel, iron ore, and minor bulks such as aggregates, alumina, fertilizers, and forestry products. Handysize tonnage accounts for about half of the vessels calling at Ukraine to carry its exports but all the other sectors are impacted as for instance Cape’s transport almost all the 20 MMT of iron ore shipped to China each year. But whereas Ukraine iron ore exports account for little more than 1% of world seaborne iron ore trade and this loss of cargo could probably be substituted by additional ore from Australia in Capes or India in Supras, replacing Ukrainian grain will represent a much greater challenge.

Last year Ukraine exported nearly 24 MMT of corn making it the world’s third largest exporter, as well as over 20 MMT of wheat and 5.5 MMT of barley as the fourth biggest global shipper of both these grains. For corn and barley, China is Ukraine’s biggest customer, importing 8 MMT of corn and nearly 3 MMT of barley in 2021 and the USA which already has limited existing additional supply, is the only realistic alternative, given that China does not buy from Brazil (due to its GM element) whilst it would have to substitute barley if available from either France or Australia. Other major importers of Ukrainian corn include Spain (2.5 MMT), Netherlands (2.2 MMT), Egypt (2.2 MMT), Iran (1.6 MMT), and Turkey (1 MMT) which at 0.9 MMT is also the other main customer for Ukrainian barley. Replacement corn could perhaps be sourced from Brazil or USA adding additional ton-mile demand but again concerns surround ever lower corn reserves. Should Ukrainian farmers be unable to plant corn and barley in March/April for this year’s harvest then global supplies could potentially become even more critical.

Ukrainian wheat is much more widely distributed with Egypt and Indonesia at around 3 MMT each the largest markets with Turkey third at 1.5 MMT. However, Ukraine is an important source for the demands of several African and Middle East countries with Yemen importing 0.75 MMT in 2021 (three quarters of all its shipments), Saudi Arabia (0.7 MMT) and at 0.6 MMT half of Libya’s wheat, whilst for Ethiopia at 0.6 MMT and Kenya 0.35 MMT; Ukraine is a vital supplier of wheat. But whereas Indonesia and Saudi Arabia could probably find additional supply from Australia which has had a bumper harvest, other countries closer to Ukraine may struggle for alternatives as doubts also surround the ongoing export capability of the world’s largest wheat exporter, Russia (25 MMT in 2021).

With some evidence of concerns over future security of grain supply in particular, trading activity within the Black Sea has been intense so far this year, with a record 340 Dry Bulk vessels currently recorded in the area, over 100 more than this time last year.