Russia's dry bulk exports under pressure amid sanctions and adverse weather conditions

According to Howe Robinson’s annual review, Russian coal exporters continue to struggle with sanctions and declining profitability. The shipbroker forecasts the country’s coal exports to reach 164M tonnes in 2025, marking a 6.1% year-on-year decline.

BIMCO noted in a recent report that between January and November 2024, Russian seaborne coal exports dropped by 10% compared with the previous year. Analysts highlighted that Russian coal has become less price-competitive than Mongolian, Indonesian and Australian cargoes.

Reuters recently reported, based on LSEG research and International Energy Agency (IEA) data, that although Russia remained China’s second-largest coal supplier, it was the only major producer to experience a decline in shipments to China in 2024.

Furthermore, citing estimates from the IEA, Howe Robinson projected that Australia will overtake both the US and Russia as the world’s fourth-largest coal producer in the coming years.

Wheat disruptions

Coal is Russia’s largest dry bulk export commodity, followed by wheat, and projections for these shipments in 2025 are also pessimistic. Howe Robinson anticipates that Russian grain exports will decline to 47M tonnes this year, down from 59M tonnes in 2024.

Focusing on wheat shipments, BRS Shipbrokers noted in a recent report that unfavourable weather conditions have severely impacted Russia’s wheat production. Additionally, the government’s newly introduced export quota has led to downward revisions in export expectations.

According to the US Department of Agriculture, Russian wheat exports are projected to reach 46M tonnes in the 2024-2025 season, a decline from the record 56M tonnes exported in the previous season. Independent market analysts, including S&P Global, align with these projections, estimating exports at around 45M tonnes.

BRS Shipbrokers also reported that early January estimates put Russian wheat exports at 2M tonnes, significantly lower than the almorst 4M tonnes recorded a year ago. Limited supply has driven Russian wheat prices to their highest levels since June 2024, when the country was grappling with frosts and droughts. Despite strong demand, buyers are reportedly turning to more competitively priced wheat from Argentina and Australia, analysts noted.

Challenges in the Black Sea trade

The decline in Russian wheat supply is adding further pressure to an already weakened Black Sea freight market. However, Russia is not the only contributor to the region’s supply challenges, according to BRS Shipbrokers.

Citing S&P Global data, analysts noted that Russia has only around 6M tonnes left under its 16M tonnes export quota imposed by the agriculture ministry. Meanwhile, Romania and Bulgaria have approximately 4M tonnes remaining, as most stocks were sold before the end of 2024.

BRS Shipbrokers estimates tight wheat supply in the region will continue to pressure Black Sea freight rates. Notably, in January, the Supramax Canakkale trip via the Mediterranean or Black Sea to the Far East dropped by 10% on a monthly basis.

In its baseline 2025 scenario for the global grain trade, Howe Robinson projects growth will slow to its lowest level since 2018. While Brazilian and Australian shipments are expected to recover, this increase is likely to be partially offset by reduced Black Sea trade.