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

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

Price fluctuations on the commodity market brought uncertainty to the freight market on the 28th week. The grain prices are rising on the global market; following this example, domestic producers are also hiking prices. The latter although try to take a balanced approach to sales, but their actions still lead to a significant difference in discovering the equilibrium price between the parties during negotiations. Buyers’ expectations that the market will push down the new crop grain are not fulfilled. Grain prices are not falling as they used to.

On the Azov freight market, rates continue to rise amid the fulfillment of previously concluded contracts. However, the work is carried out more on spot/prompt positions, and long-term contracts are not yet concluded, with the exception of work on the Kavkaz roads transshipment. If at the beginning of the reporting week, the rate on the basis of the voyage from Rostov to Samsun was about USD 15-16 per ton of wheat, then by the end of the week it increased by at least USD 3 for voyages with shipments in July. Rates of USD 18-19 per ton for voyages from the Azov Sea ports to the Turkish Black Sea coast were considered to be comfortable from Owners’ side. Based on the development of the situation on the commodity market, the dynamics for August may be predicted as early as the 30th week.

The weather in the Black Sea region negatively affects the progress of harvesting operations. The cropping in Ukraine is slowed down due to heavy rains. As a result, shipments from the Ukrainian Black Sea ports are still not enough for ensuring stable market growth. During the reporting week, rates from Ukrainian ports to the Eastern Mediterranean and the Adriatic hovered at around USD 18-20 per ton for parcels of 6-10 thousand tons.

An increasing number of Russian-flagged vessels are switching to the transshipment on Kavkaz roads. This is explained by the sharp spike of rates in this segment due to the need to fulfill major contracts. If the main part of the Russian-flagged fleet will work on the transshipment, then the rates for direct voyages from river elevators will rapidly go up due to the lack of vessels.

The Caspian region is waiting for the new crop grain. Based on the open positions of the fleet and the level of rates discussed on the Caspian market, it is clear that active growth in this region has not yet begun. The reason is the fact that the main part of the already harvested grain from the Krasnodar territory is shipped from deep-water ports and from the Kavkaz roads; the number of deals that are concluded in this region does not allow rates to grow due to high grain prices. The situation is expected to change by the end of the month. Barley from the Central regions of Russia should appear on the market in late July-early August.