22 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
On the 22nd week, the coasters markets in the Azov and Caspian regions kept the trend towards stagnation. Apparently Owners will continue facing hard times during the month of June. Most of the tonnage is still open in spot, and there is a lack of cargo offer.
News on the fact the demand for tonnage may grow only by the end of July-early August due to the precipitation deficit in the southern regions, also does not add any optimism. In confirmation of that, futures for July contracts exceed August contracts, in average, by USD 5 at the moment. However, it is too early to assume that the entire coasters fleet came to a standstill. Shipments are being made, but there are very few of them. The rate on the basis of the voyage from Rostov to the Turkish Black Sea coast still fluctuates around USD 10 per ton of grain.
Charterers of non-grain cargo are taking advantage of the moment and trying to conclude profitable contracts for the next six months. Their activity provoked on the market a surge in demand for time charter for the next six or seven months. Commonly, during the high season (from July to December), the rate of time charter for a Russian-flagged river-sea type vessel of 3000 tons fluctuates from USD 3600 to USD 4200 per day. This year, when transferring vessels for time charter in May-early June (during the low season), there has been a marked tendency to reduce the rate to USD 3000-3200 per day, depending on the vessel’s characteristics.
As indicated by statistics, grain exports to the EEU countries, especially to the Republic of Belarus, have grown significantly on paper over the past few months. Market experts attribute this to manipulation of documents and increase in exports of products bypassing the quota under the guise of fictitious deliveries to the EEU countries. It should be noted that many Exporters use such schemes not in the result of good living, they only try to fulfill previously signed export contracts in order to avoid penalties for non-performance.
Market insiders think that the Caspian region may face a deeper crisis at the beginning of the new grain season than the Azov one. In the Iranian direction, the main commodity nomenclature, as before, will be corn and barley. According to official statistics, currently there are large carry-over stocks of these crops. This will not allow producers to get affordable price from Buyers at the beginning of the season, and many of them will hold their products. This likely may significantly slow down the dynamics of the market recovery in the region.