13 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
During the 13th week, the Azov freight market showed growth again. This is still explained by the export activity due to an increase in the exchange rate difference between the US dollar and the ruble. Out of concern for the Russian market state, the Ministry of Agriculture imposed unspoken restrictions on the export of seeds, rice, millet, safflower, and officially banned the export of cereals to keep prices on the domestic market at the same level. At the same time, it was announced about the introducing of the temporary quota for the export of wheat, rye, barley and corn, which limits their export in the amount of 7 million tons from April 1 to June 30. Experts think that this measure will not significantly affect the market, as far as a smaller volume was expected for export (approximately 6.7 million tons) for the remaining three months of the current grain season.
Amid the background of increased rates, Charterers preferred to take their time and postpone shipments. Many of them were sure that a week off could stop the issuance of quarantine and phytosanitary certificates, which would lead to a reduction in shipments in the 14th weeks. However, as it became known at the end of the 12th week, all state authorities will continue their work, so Charterers will not have a chance of saving money. As a result, there is expected even greater imbalance in favor of the supply of cargo in the next week and, accordingly, a further increase in rates.
One of the key points of the coming season will be the low water level in the Don River. Upon the navigation start, the maximum draft of vessels will be limited to 2.9 meters, which will make the work in the inland waterways difficult for many Owners. The advantage will be taken by the vessels of Omskiy and Sibirskiy types. Other vessels types will not be able to work normally due to the low load capacity at this draft. Some of the signed contracts for work in transit and at the Volga River are already being revised. With the current trend, most of other coasters will look for cargo directly from the Azov Sea ports, which will be more interesting for Charterers. These vessels will likely take on a significant part of the cargo from the Azov region.
The demand for transit cargo from Turkey to the Caspian Sea increased sharply on the last week of March. As a result, almost all available tonnage for the first half of April was fixed. The average rates for such a voyage on the Omskiy type vessel range from USD 110 to USD 125 thousand lumpsum. In combination with backhaul fertilizers from the Caspian Sea, this looks much more attractive to Owners than a regular voyage from Rostov to Turkey. The current situation, especially in light of the expected low water level in the river this year, will greatly reduce the number of available Omskiy type vessels on the market, which importance is growing every week.
In the Caspian region, the effect of the ruble devaluation was delayed by about one to two weeks compared to the Azov region. Rates went up sharply on the back of increased demand only last week. There was a lot of cargo on the market, including from small Charterers, which caused euphoria among Owners, so they began to drive up rates and try to cancel current contracts. Many of them are actively working on loading options from the Middle Volga, as well as from Volgodonsk and Kalach. There are no problems with the draft at these ports yet, unlike the Don River, and the vessels can take cargo up to full capacity.