29 week: Russian River, Azov / Black Sea, Caspian; Coaster shipments
The freight continued to rise in the Azov region and reached USD 29 pmt of wheat basis Rostov – Marmara. This is $ 3 more than the level of week 28.
Some Charterers suggest that the freight growth will stop in coming days. It is raining for more than a week in the Central Black Earth region. The roads are washed away; the traffic of road vehicles with grains is heavy. It’s necessary to wait for the drying of roads as to restore the delivery cargo to ports from fields. During this time, the quality of grain will decrease; a part of the harvest will spoil and become nonmarketable. In this context market participants report a sharp cargo shortage in the Azov region. The harvested yield was almost carried out, but now it’s impossible to form new parcels. All of these factors adversely impact the overall export pace, and, especially, dramatically affect Owner of the «river-sea» vessels that work from the Azov ports. The Ship Owners had expected continual activity for the whole grain season.
The Charterers, who under contractual obligations have to carry the parcels of new harvest just in time, nowadays they suffer losses as late delivery to the buyer’s port. About 70 – 80 thousand tons of cargo is not come to the Rostov and Azov market daily, this is going to reduce rates in the region in the short term. Also, against the backdrop of growing market it is being noted the activity of Ship Owners of the “sea” type fleet in the Azov basin. It’s more profitable to work under loaded from here than from the deep-sea ports of the Black Sea.
The favorable time has come for the coal Charterers in order to proceed in the shipments. If earlier it was irrational to compete with the grain rates, but now in the conditions of temporary deficit of grain cargo Ship Owners are more inclined to consider coal shipments.
The Caspian market still remains the same level. The freight for voyage ex Astrakhan to Iran kept the level of two last months and amounted USD 31 per ton of wheat. The grain quality of new harvest is lower than in last year. Charterers in the region have already faced problem of undercapacity of vessels due to low grain density. If the average grain density was about 640 grams per liter last season, then in this year several ships were loaded with the grain unit 590 g / l. Such situation has an impact on the freight rate, as the ships don’t get full about 150 – 250 tons cargo due to downscale goods. Market participants suppose that owing to thin corn yield this year and poor quality of barley, the freight market position in the region will be very much different from last time. While it is hard to predict the scale of these fluctuations, one thing is sure the intensity of transportation in the Caspian Sea will be much less during the whole grain season.