THE dry bulk market has returned to a positive state of play following the negative impact of Russia’s military incursion into Ukraine.

Spot rates and forward freight agreements have edged up as supply-demand fundamentals are back in focus.

“The dry forward freight agreements reacted strongly and negatively [along with most markets] to the Russian invasion of Ukraine,” said Freight Investor Services head of business development Kerry Deal.

Capesize forward freight agreements were particularly hit, dropping 17% to $21,750 for the April contract in the first two days after the invasion, while panamaxes held ground better, shedding 11% to $24,740.

However, both have regained most of the lost ground, rising by $4,000 and $2,000, respectively, in March 1 trading.

There is “a general feeling that the market collapse had been overdone, and tonnage demand remained healthy on the larger sizes across both minerals and grains away from the Black Sea region,” he said, though “huge uncertainty” remained.

US-based Breakwave Advisors said that as risk appetite was reduced, forward premiums in the futures market had shrunk.

Although the smaller size vessels continued to find support as a result of an already stretched global supply chain, the larger vessels lacked cargo flow momentum.

However, it expects “seasonal forces will once again become increasingly relevant” and it expect some gradual improvement in demand for iron ore transportation out of Brazil, beneficial for the capesize segment. 

“Such a pickup, combined with the relative strength in panamax and supramax spot rates, should also push spot rates for capesizes higher,” it said in a note.

“Fundamentally, the dry bulk market looks reasonably strong, but global geopolitical risk has now increased, affecting several areas of the global economy with unknown outcomes or relevant timeframes.”

Signal Ocean, a Greece-based analytics platform, said that demand evolution shows “significantly higher growth this week” for the panamaxes, followed by worries about disruptions on Russian coal deliveries.

The trend is also higher for supramaxes given that Ukrainian grain ports were now closed and buyers were seeking alternatives, it said. 

More than a dozen bulkers have been stuck at Ukrainian ports since February 22, mostly in the panamax size category and below, according to Lloyd's List Intelligence data.

Star Bulk confirmed it has three vessels which have completed loading and which are waiting for ports to re-open so that they can set sail. Crews onboard remain well and the safety of seafarers is the top priority. 

The company does not have any vessels in Russia, and it has "no imminent business under consideration". 

All its vessels are covered by war risk insurance. 

Capesizes rose 14% to $15,258 per day at the close on the Baltic Exchange on March 2, while panamaxes gained 1.3% to $23,703. 

Supramaxes were at $27,178, a gain of 1.7%, while handysizes were at $25,577, an increase of 1.1% to the highest since end-December.