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

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

According to data from shippers, the price of grain on the domestic market continues to grow, which has a negative impact on exports. In the meantime, the volume of harvested grain exceeds last year, as estimated at the beginning of August. According to expert opinion, another reason for that is the improving infrastructure for grain storage in the regions. Producers are trying to hold on to the new crop wheat and thus create a roaring demand on foreign markets.

Continued rainfall in the Central Federal District kept high domestic grain prices and influenced the further fall of freight rates in Azov to the level of USD 19-20 per ton of wheat on the basis of the voyage from Rostov to Samsun. At the current state of the market, the minimum difference between selling and buying prices is about USD 3 per ton, while both sides believe that the market will move in their favor in the future.

The holiday of Kurban Bayram led to the termination of purchases from the middle of the week by Islamic countries, which actually went on a long weekend. The number of new deals concluded tends to zero, and Traders tried to cross over to the European direction.

Many Owners preferred to postpone the conclusion of contracts for the after-holiday period, counting on the subsequent growth of the market. Besides, a large part of the fleet is delayed in queues at the ports of discharge, becoming unavailable for new voyages temporarily.

In spite of early summer’s rumors about the plans of the port of Rostov to move away from handling of general cargo and focus on bulk cargo, in mid-August transshipment of equipment is still performed. Tariffs for transshipment on the direct option remained at the same level, but the use of berths has become much more expensive. At the same time, direct transshipment requires coordination of the side by side approach of the river-sea vessel and the river vessel, which may lead to idleness of both vessels under adverse conditions. By such manners, it is possible to predict the growth of demand for direct shipments of Russian-flagged vessels due to the rise in prices of ‘vessel-berth-vessel’ transshipment.

A similar situation has developed in the Caspian region: business activity has decreased to a minimum due to holidays (Kurban Bayram) and long weekends. This may lead to a large congestion of vessels at Astrakhan and on the roads of Iranian ports, which will cause a decrease in freight rates. According to Traders, the difficulties in settlements with Iran have resulted in the fact that most local importers are trying to switch to cash payments. In the region, complex schemes of money transfer through Turkish and Dubai companies have become a common practice, which dramatically prolongs the transfer time periods and often leads to idleness of vessels in wait for receiving of freight payment.