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

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

On the 27th week, the Azov region’s commodity market became active, which tugged freight along. Mostly residues were sold, but the new crop of barley had already offered for shipment. Shipments were performed by coasters to long-haul destinations, or in large parcels via Kavkaz roads transshipment. The amount of available spot tonnage has been significantly reduced, and Charterers have begun to lose momentum. Market insiders started talking seriously about the situation turning to Owners’ advantage. By Friday, spot vessels were being fixed at USD 1-3 more than last week, and the difference with the prompt ones reached USD 5. However, the sharp spike in rates did not come as a great shock to Charterers, who have already considered such a scenario when concluding their pre-sale contracts.

Many Owners hope to see rates rise to the level of USD 20 per ton on the basis of the voyage from Yeisk to the Turkish Black Sea ports in the near future. However, at the moment, the market is rather not ready to meet these expectations. There is still uncertainty on the part of the regulatory authorities: the restrictions have expired, but, at the same time, “nobody gave permission”. For now, it is unclear, whether these are bureaucratic impediments or the ban is expected to be extended in order to protect the interests of monopolists. Therefore, rates on the basis of the voyage from Azov ports to the TBS will likely remain at a level above USD 15 in the near future, but the ceiling limit of USD 20 will not be reached.

In general, despite positive forecasts for the grain yields this year in the Russia, prices on the Azov region’s commodity market went up following the Chicago Stock Exchange. Arguments regarding “reduction of price under the pressure of a new crop” do not work during negotiations. If the price gap was about USD 5 at beginning of the reporting week, then towards the week’s end it increased, and the prices offered by most Turkish Buyers were not accepted. The latter went for price rising only when the grain was needed to resupply the stock of raw materials in order not to stop production.

Starting from July 6, the permissible vessels’ draft has been reduced at the lower reaches of the Don River; it will now be 3.1 meter. At the height of the grain season, this means an increase in the cost of river transportation. Many Traders are beginning to trend towards delivering cargo to seaports by land in order to avoid the risks of vessel’s short-loading or idleness. The greatest headache for Owners of the deep-sea fleet is caused by water level fluctuations: due to the draft restrictions, they have to significantly underload their vessels sailing from the Caspian Sea, or to include a ballast passage in the rate of the main cargo transportation towards the Caspian Sea.

In general, the Caspian region’s market reacted with relative calm, although the number of cargo offer even increased slightly. This is connected to the desire to sell the residues of grain stocks before the appearance of the new crop. During the week, rates have risen by an average of a US dollar. However, there is expected even more growth by the end of the month, so Owners are not ready to discuss consecutive voyages; they are fixing only spot positions.