The coasters market spent the 21st week in relative silence. Freight rates fell by another USD 1, and a ton of bran could be shipped for USD 10 on the basis of the voyage from Yeisk to the Black Sea. There are no positive changes, there is observed the lack of cargo; the fleet is working on the verge of profitability, many vessels are open in spot, and there is a tendency to further increase the spot tonnage.
Due to the holidays in Muslim countries, especially in Turkey, there is a noticeable decline in business activity; long queues of vessels waiting for loading and discharging formed at Turkish ports. Many companies that still have possibility to export, i.e. whose products aren’t subject to restrictions, have to wait until the middle of next week when holidays will end, as far as buyers have taken a break and do not confirm any transactions: all Turkish banks are closed, and it is difficult to pay for the goods on time and get permission for discharging.
Experts note a decrease in the volumes of shipments from Exporters of non-grain cargo. Due to the economic downfall and the subsequent drop in demand for finished products, manufacturing companies significantly reduced the volume of purchases of raw materials and energy supplies. Most Traders think that the transportation of coal and metal continues at the level necessary only to keep production in working order. The situation is not expected to change until mid-summer, assuming that the quarantine restrictions will be lifted or at least eased, and stability and predictability will be restored in the banking sector. The latter is necessary for increase the volume of working capital of market participants.
Many Traders and Owners are waiting for the new grain season; they reckon to resume their activities with the new crop appearance on the grain market. This should favor the growth of the freight market. This growth, as well as the number of shipments from the Azov ports, will directly depend on how much Russian grain will be in demand from major market players working from deep sea ports. Russia and Ukraine are expected to be the main grain exporters in the Black Sea region in the new season. In Romania, a poor yield is predicted due to the drought.
At the moment, the Volga region’s flour mills are experiencing a shortage of raw material supplies due to the fact that the purchase price for wheat is too high. It is expected that producers will not rush to dump the new crop, and exporting companies’ buyers will have to face fierce bidding. In case if Russian grain wins any foreign tender with shipments from Taman or Novorossiysk, there may be expected new restrictive or regulatory measures on grain exports. For Exporters working from the Azov ports, these concerns complicate the planning their own export program.
In the Caspian region, the number of requests for inland transportation have rose; this may be explained by an increase in domestic purchasing prices for grain. Farmers clean their warehouses of the old crop and prepare elevators for the new crop grain.
Part of the coastal fleet will be laid-up for a couple of months due to the very low freight market. Owners think that “it is easier to stand idle or to go for unscheduled repairs than to work at a loss”.