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Days go by and there is still no light at the end of the tunnel

Days go by and there is still no light at the end of the tunnel for the UN's sea corridor for Ukrainian grain. Russian authorities have expressed their denial to renew the grain deal with Ukraine on the 17th of July, something that will create an additional headache to the UN as they are trying to maintain global food security. Grain exports through the Black Sea Grain Initiative have slowed down to 1.3m tonnes in May, which is the lowest volume since the UN, Ukraine and Russia came to an agreement in the summer of 2022. The grain corridor is used by several vessel sizes, from Handysizes to Panamaxes and the looming non-renewal of the agreement will have an impact on Dry Bulk earnings. If this happens, Ukraine will turn to the Danube River for an alternative route. Danube will become the key outlet for Ukrainian exports as the new harvest era is near and Kiev is trying to improve Ukrainian infrastructure by the river to allow larger vessels to transit.

The blocking of Ukrainian grain trade is creating a global food insecurity, while other countries are planning strategies in order to fill in the gap. Brazilian authorities are going to allocate more than USD 90 billion in order to support & finance domestic agricultural investments & businesses in order to boost the country's already formidable agriculture sector. Enhanced farm infrastructures, new storage facilities and irrigation systems are going to boost Brazil's farm sector and help it produce and export larger volumes of crops and grains, helping ease global food security concerns. As Brazil has emerged as an agricultural powerhouse in recent years and a leading supplier of major agricultural products, a further boost to the production will increase the need for exports, adding both to the vessel demand and to tonne miles in the market.

Leaving the grain trade aside, the war in Ukraine has also affected the iron trade and most analysts believe that global iron trade has been transformed for the years to come. The Ukrainian steel industry traditionally exported most of its products through the Black Sea ports, and this pattern has stopped since the beginning of the war - as no agreement to secure a safe passage for the metallurgical industry has been reached. To ensure the exports are unaffected, Ukrainian steelmakers had to create and use alternative routes, involving shipments by rail to the Baltic or Romanian ports, by the Danube River or ports in the Adriatic. These are alternatives that are both costly and time consuming, and as a result have reduced the seaborne exports to about half the levels they were before the war. On the Russian side, Iron exports have also dropped, but only about 20% compared to the more than 50% reduction observed on the Ukranian Iron exports. The sanctions against Russia have given a hit to its iron and steel industry but Russia has still managed to find new markets. Before the war, 50% of Russia's iron exports were going to the USA but now other suppliers like Brazil, India and Turkey run to fill the gap left by US sanctioning Russian imports.

The significant trade alterations that the Ukrainian war has created, have affected seaborne dry bulk trade since it was the main way of exporting iron and steel. Even if the war ends tomorrow, global trade and especially seaborne trade will need ample time to return to pre-war levels and activities in the area.

On the other side of the world, China's coal imports have surprisingly increased despite the significant boost of the domestic coal production. Chinese coal production is up almost 6% year on year, but surprisingly seaborne coal imports have also increased by 70% y-o-y. Chinese power plants have seen their stockpiles hit a record high of almost 190 million tonnes in early June, trying to take advantage of the low price and high quality of coal imports. Indonesia, Russia and Australia are responsible for almost 95% of the coal imports to China but especially Russia and Australia have doubled their volumes since 2022. As China's economy faces challenges and has not rebounded as analysts believed it would after the pandemic, the increased coal seaborne imports are the key factor that supports Capesize vessels and market analysts hope that China will continue to build coal stockpiles – despite the lower domestic demand - and prioritise the imports.

Days go by and there is still no light at the end of the tunnel for the UN's sea corridor for Ukrainian grain. Russian authorities have expressed their denial to renew the grain deal with Ukraine on the 17th of July, something that will create an additional headache to the UN as they are trying to maintain global food security. Grain exports through the Black Sea Grain Initiative have slowed down to 1.3m tonnes in May, which is the lowest volume since the UN, Ukraine and Russia came to an agreement in the summer of 2022. The grain corridor is used by several vessel sizes, from Handysizes to Panamaxes and the looming non-renewal of the agreement will have an impact on Dry Bulk earnings. If this happens, Ukraine will turn to the Danube River for an alternative route. Danube will become the key outlet for Ukrainian exports as the new harvest era is near and Kiev is trying to improve Ukrainian infrastructure by the river to allow larger vessels to transit.

The blocking of Ukrainian grain trade is creating a global food insecurity, while other countries are planning strategies in order to fill in the gap. Brazilian authorities are going to allocate more than USD 90 billion in order to support & finance domestic agricultural investments & businesses in order to boost the country's already formidable agriculture sector. Enhanced farm infrastructures, new storage facilities and irrigation systems are going to boost Brazil's farm sector and help it produce and export larger volumes of crops and grains, helping ease global food security concerns. As Brazil has emerged as an agricultural powerhouse in recent years and a leading supplier of major agricultural products, a further boost to the production will increase the need for exports, adding both to the vessel demand and to tonne miles in the market.

Leaving the grain trade aside, the war in Ukraine has also affected the iron trade and most analysts believe that global iron trade has been transformed for the years to come. The Ukrainian steel industry traditionally exported most of its products through the Black Sea ports, and this pattern has stopped since the beginning of the war - as no agreement to secure a safe passage for the metallurgical industry has been reached. To ensure the exports are unaffected, Ukrainian steelmakers had to create and use alternative routes, involving shipments by rail to the Baltic or Romanian ports, by the Danube River or ports in the Adriatic. These are alternatives that are both costly and time consuming, and as a result have reduced the seaborne exports to about half the levels they were before the war. On the Russian side, Iron exports have also dropped, but only about 20% compared to the more than 50% reduction observed on the Ukranian Iron exports. The sanctions against Russia have given a hit to its iron and steel industry but Russia has still managed to find new markets. Before the war, 50% of Russia's iron exports were going to the USA but now other suppliers like Brazil, India and Turkey run to fill the gap left by US sanctioning Russian imports.

The significant trade alterations that the Ukrainian war has created, have affected seaborne dry bulk trade since it was the main way of exporting iron and steel. Even if the war ends tomorrow, global trade and especially seaborne trade will need ample time to return to pre-war levels and activities in the area.

On the other side of the world, China's coal imports have surprisingly increased despite the significant boost of the domestic coal production. Chinese coal production is up almost 6% year on year, but surprisingly seaborne coal imports have also increased by 70% y-o-y. Chinese power plants have seen their stockpiles hit a record high of almost 190 million tonnes in early June, trying to take advantage of the low price and high quality of coal imports. Indonesia, Russia and Australia are responsible for almost 95% of the coal imports to China but especially Russia and Australia have doubled their volumes since 2022. As China's economy faces challenges and has not rebounded as analysts believed it would after the pandemic, the increased coal seaborne imports are the key factor that supports Capesize vessels and market analysts hope that China will continue to build coal stockpiles – despite the lower domestic demand - and prioritise the imports.

Sale and Purchase:

On the dry S&P activity, The Newcastlemax "Benitamou" - 206K/2008 Imabari was sold for high USD 22 mills basis one year BBHP to Chinese buyers. Clients of Costamare acquired the Capesize "Aquarange" - 180K/2011 HHIC- Phil for USD 23.5 mills. The Scrubber fitted Kamsarmax "Lord Star" - 83K/2013 Sanoyas changed hands for region/ excess USD 22 mills. Greek buyers acquired the Ultramax "KK Progression" - 64K/2018 Tsuneishi Cebu for USD 28.5 mills, while the Handysize "Tomini Bora" - 38K/2016 Zhejiang Ouhua went also to Greek buyers for USD 19.65 mills. On the same sector, the OHBS and Scrubber fitted "African Bulker" - 36K/2015 Shikoku yard was sold for low/mid USD 21 mills to South Korean buyers.

The S&P activity on the wet market remains subdued as only three vessels found new owners. The Suezmax "Melodia" - 159K/2011 was sold for USD 47.5 mills to clients of Gardsea. The MR2 "Beacon Hill"- 47K/2005 Onomichi changed hands for USD 19 mills to undisclosed buyers.

Xclusiv Shipbrokers Inc.