Business, Freight News, Sea

Russia Bulk Exports Continue Slide, BIMCO

[ December 6, 2024   //   Gary G Burrows ]

Russia could continue to see declining seaborne dry bulk exports through the first half of 2025, due to coal price competitiveness and a fall in wheat volumes, according to a BIMCO shipping analyst.
Through November, Russia has seen dry bulk exports decline 5 percent year over year, driven by a 10 percent decrease in coal shipments, said Filipe Gouveia, shipping analyst for BIMCO, a trade organization for shipowners, charterers, shipbrokers and agents.
“The price competitiveness of Russian coal has deteriorated, compared to Mongolian, Indonesian and Australian cargoes, and a gradual increase in exports over land to China has also contributed to this decline,” Gouveia said.
So far this year, wheat and fertilizer shipments – Russia’s largest export commodities after coal – rose 6 percent and 7 percent year over year, respectively, mitigating some of coal’s losses. Although this year’s wheat production fell by 11 percent, exports strengthened as inventories from the previous harvest were exported. Russian wheat shipments have grown considerably since 2022 due to large harvests in 2022 and 2023, Gouveia said.
The price competitiveness of Russian coal is likely to worsen, as Russian Railways increased their freight rates by 13.8 percent in Dec . 1. Sanctions brought on by Russia’s war with Ukraine have led to a spare parts shortage, making railway logistics more challenging and costly. As Russia relies on its railroads to transport coal to the ports, this directly affects export prices.
“Despite a notable decrease in cargo, the weaker Russian coal shipments have had minimal impact on the dry bulk market,” Gouveia said. “Russian coal has been fully replaced by cargoes from more competitive exporters. Furthermore, sailing distances have not been impacted by this shift in suppliers.”
Russian wheat exports may also decline soon, as Russia has seen significant food price inflation throughout 2024, reaching 9 percent in October. Bread prices are up 13 percent, likely influenced by declining wheat inventories amid a weaker harvest and stronger exports.
In response the Russia government increased wheat export tariffs by 18 percent from Dec. 4, and it plans to implement a 62 percent smaller export quota from Feb. 15 to June 2025. Russia usually allows quota-free wheat exports between July and January, following the wheat harvest in the summer, and then restricts them the rest of the year.
“Russian dry bulk shipments could continue to fall during the first half of 2025 as coal price competitiveness worsens and wheat volumes decrease,” Gouveia said “Unlike coal, a decrease in wheat shipments could have a more notable negative impact on the dry bulk market. Russia is the world’s largest wheat exporter, and as global inventories are low, other countries may not be able to fully replace the volumes.”

Tags: BIMCO