26 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

26 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

On the 26th week, the Azov Sea market did not show significant changes. Freight rates increased by an average of USD 1, which more likely may be explained by pressure in waiting for the upcoming grain season. Many Charterers were trying to fix spot positions in the quickest possible time in order to protect themselves from the sharp spike in rates. Amid this, Owners have managed to balance the market, and in some cases, turned it to their advantage. At the same time, there are still few spot shipments, and the tonnage supply exceeds its demand; however, Owners are already flatly refusing to work at the minimum rates out of concern to miss the long-awaited market growth.

Traders think that activity will resume starting from the 27th week. According to market insiders, a new crop of barley should appear in the port by this time; there also should begin firm negotiations on wheat. At the same time, many of them agree that significant changes on the market are not expected until mid-July. However, Owners are trying to fix only spot positions, holding their prompt fleet in case of sharp jumps in freight.

At the beginning of the new season, grain is traded at a very large price range. Strong fluctuations of the latter are explained by news reports and forecasts of the upcoming harvest in the main grain-producing countries. Thus, in Europe, the yield forecast has been declining for several weeks in a row. In Russia, on the one side, the forecast for winter barley is lowered weekly due to the lack of precipitation; however, at the same time, the forecast for wheat and other later crops is raised. In the light of such uncertainty, there are signed very few long-term contracts, which generally hinders the growth of rates.

During the reporting week, there have appeared spot offers from Charterers on the market, with the actual date of documents issuance on July 1. This allowed Shippers to exclude the loaded volume from the quota and, at the same time, to fix the vessel at a low rate. Such offers, even considering the risks of fleet idleness, were in demand from Owners’ side; this once again indicates the lack of cargo on the market.

The transit market has been under downward pressure in recent weeks. Compared to the beginning of navigation, the demand for the transit fleet fell, as the main part of urgent cargo was shipped, so Charterers began to take a more careful approach to the choice of vessels. This was the reason of rates declining, both towards the Caspian Sea and in the backhaul direction. An additional impact was the fact that the main part of transit cargo towards the Caspian Sea is intended to the Turkmenbashi port, which caused there congestion. Voyages in the backhaul direction often start from Bekdash, where there are also large queues due to the significant congestion of vessels. Charterers have almost no opportunity to work on the spot market to avoid heavy demurrages. Thus, by reducing freight rates, they try to reduce their losses.