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

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

Freight rates moved into an active phase of growth on the Azov market. The demand for tonnage clearly exceeds the number of available fleet, and that fact is forcing Charterers to improve their offers in order to avoid breakdown of executed contracts. Key differences of the 27th week from the previous ones were an almost full absence of the spot fleet in the region, as well as the tendency to shortening of sea-legs distance from Owners’ side. For the sake of profitable freight Charterers have to remove all options further than Marmara, considering that Owners prefer to make short voyages on the growing market.

Georgian importers express concern about the current geopolitical environment. It is whispered on the market about a possible imposition of embargo by Russia on the supply of wheat in Georgia, which historically was very dependent on supplies of Russian provisions, including grain. At the same time Exporters believe that if any restrictions will be imposed, the process of issuing phytosanitary and quarantine documents will likely become more complicated, which will increase the transit time and freight rate.

At the moment, the grain of the new crop is supplied to sea ports primarily, and the demand for tonnage from the river is low. This is most pronounced in relation to shipments to Turkey, where are not many real deals, apart from the pre-contracted volume. Amid a backdrop of the decrease in the activity of fertilizer flow from the Caspian Sea (due to difficulties at the Garabogaz Fertilizer Plant), vessels working in transit faced the problem of lack of firm cargo offers from the mid-Volga. Basically, on the market there are offers from the Rostov region: Rostov, Starocherkassk, Volgodonsk.

The Caspian market has come alive again for the first time in weeks owing to the appearance of new crop barley in Astrakhan. In the meantime, the Russian-flagged vessels are in short supply. Charterers are ready to overpay an average of USD 2-3 for them as compared to the fleet with foreign flags. Sanctions against Iran continue to have a profound effect on Caspian trade. Market insiders expect that the Azov market may be flooded with additional volume of grain intended for Iranian supplies, which will affect significantly the power landscape in the region. In this case, the price of grain will reduce seriously, and the activity of importers will grow, which can lead to a record demand for tonnage.

Some farming units in the Saratov and Samara regions have already started harvesting, and most producers are going to start harvesting next week. For today, there are no clear forecasts for the quality of grain from this region. Upon preliminary information, the grain-unit may be low due to lack of rain, but many shippers still hope solid performance.