With the coming of the New Year, freight rates in the Azov region underwent steep correction. The cost of freight dropped by 10 $ over the first week of January. The average level, wheat basis, on the Rostov-Marmara route is around 28 $ per tonne.
During the second week Charterers have shown minimum activity. Some of them completed their programs even before New Year and have suspended voyages for now, but some are still recovering after the celebrations and have not managed yet to conclude new contracts. Accordingly, an extreme lack of cargo orders occurred on the market, which generated excess supply of vessels, and freight rates sharp drop. Starting from the end of week 2, situation changed counter-wise, as Traders activity grew and more parcels emerged on the market, which at the moment halted rates drop and provided chances for market’s rebound.
Among other factors, the market is influenced by the noticeably appreciated ruble. By estimates of market participants, large agro holdings, which harvest and export their crops by themselves, will feel confident this January, while ‘pure’ Traders will need some time to get used to the new supplier prices.
As of the 1st and 2d weeks of January, we observed an accumulation of spot tonnage in the Azov Sea. Ship Owners consider non-grain cargoes more willingly than before, to have the prospect of at least taking something and setting sail in hope that the market will settle within the nearest 2 weeks.
The ice restrictions, introduced on January 14, gave hope to the Owners of ice-classed vessels that the part of vessels unable to work in ice conditions will leave the market and freight rates for Rostov/Azov go up.
In the Caspian, freight rates are also demonstrating a decreasing tendency. Firstly, according to freight terminal reports, the amount of cargo accumulated over the holiday period is very small. Secondly, some Charterers postpone shipments in view of the unstable political situation in Iran, and this potentially can lead to idling at ports of discharge. The market freight rate on the Astrakhan – Iran route has become obscure, owing to the rather wide for the region range of cargoes. Besides grain, the merchandise intensively shipped across the Caspian at the moment includes timber, metals, paper and other general cargoes. Vessels employed on a contractual basis currently charge around 35 $ per tonne. On the spot market, rates range from 40 to 42-43 $.