Market experts are divided on whether Russia’s backing out of an EU-led safe passage scheme for Ukrainian grain in the Black Sea will have an impact on the weakening dry bulk shipping market. Moscow made this move on Saturday in response to a supposed Ukrainian drone attack on its warships earlier that day at Sevastopol in Russian-occupied Crimea. The UN and Turkey are keeping the corridor open, having sent surveyors to inspect 40 outbound vessels in the Turkish straits on Monday, the Joint Coordination Centre (JCC) of the Black Sea Grain Initiative (BSGI) said.

Russia’s lack of support and adherence to the scheme should not affect the market because the grain corridor has had no market impact since opening in August, according to one expert. “I thought the initial deal also would not move the needle,” said John Kartsonas, founder of Breakwave Advisors, an asset management firm that runs a dry bulk ETF trading platform. “The dry bulk market has larger worries than the relatively low cargo flows out of the Black Sea.” But another market expert believes that Russia’s backing out of the scheme will benefit the dry bulk shipping market. “Grain will have to come from elsewhere and no doubt travel further, thus positive for freight rates,” Guiseppe Rosano, founder of UK broking house Alibra Shipping, told TradeWinds. Ukraine has exported 9.5 MMT of grain and foodstuffs from the ports of Odesa, Chornomorsk and Pivdennyi/Yuzhny since the initiative began on 1 August. There were 97 loaded and 15 empty inbound vessels registered for JCC inspection around Istanbul on Monday.

By comparison, Brazil exported 6.1 MMT of grain during the month of August alone, according to independent price reporting agency Agricensus. The main driver behind the dry bulk shipping market’s malaise is China’s “at best mediocre” demand for iron ore as its real estate sector continues to struggle, Kartsonas said. “China is the only region that can make a difference,” he told TradeWinds. “And it is making a difference now, by being a very weak spot in the dry bulk map. Unless there is some revival there, the dry bulk market will remain depressed for the months to come.”

Average spot rates for all bulker sizes on the Baltic Exchange fell on Monday to continue a steady two-week slide. The Capesize 5TC of spot-rate averages five key routes slid 6.6% on Monday to come in at $12,993 per day. Australian mining giant Rio Tinto hired an unnamed capesize to move 170,000 tonnes of ore at $8.50 per tonne from Dampier, Australia to Qingdao, China after loading the ship from 14 to 16 November. Rio Tinto fixed another unnamed capesize to move the same quantum of ore at $8.75 per tonne on the same route after loading the vessel from 10 to 12 November. The Panamax 5TC dropped 3.6% on Monday to hit $15,703 per day, while the Supramax 10TC declined 3.1% to $15,808 per day on Monday. Another expert also believes that China’s lackluster demand for ore will keep putting negative pressure on the market, but he pointed out that the futures market indicates that average spot rates will hit bottom soon. “The FFA curve points to rates averaging around $11,000 per day for the remainder of the year,” Jefferies analyst Omar Nokta wrote in a note on Monday. November contracts, which begin on Tuesday, slipped 9.7% to $10,596 per day, while December contracts declined 8.3% to $10,250 per day.

He noted that Chinese steel prices “hit new lows” on Monday, today with rebar slipping to $525 per tonne and hot-rolled coil down to $510 per tonne to their lowest points since the slow market seen in 2020.