32 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The Azov coasters market spent the 32nd week in difficult negotiations on the rates level. As a result, however, nothing had really changed, and the working rates are now considered to be about USD 15-16 per ton of wheat on the basis of the voyage from Rostov to Samsun. At the same time, the number of cargo offers compensated for the low activity on the market due to the holidays. Some of Traders tried to work on the mood that the vessels will simultaneously return from discharging, which will result in a tonnage oversupply. However, this did not happen, and vessels with dates for the next week have been fixed, leaving some of the cargo open; this had stopped the market from falling.
There is still a high demand for tonnage from the river, for transit voyages through the Volga-Don Canal, as well as for cabotage voyages via inland waterways (IWW) and Kavkaz roads transshipment. There have significantly increased rates for transportation via IWW to the ports of Azov and Astrakhan. Thus, if at the navigation beginning the rate for a ton of barley on the basis of the voyage from Chistopol to Astrakhan was at the level of USD 12, then now it may reach USD 24 per ton in same direction. Perhaps, the low activity of Traders due to the Muslim holidays will negatively affect the demand for Russian-flagged vessels for cabotage voyages. However, the increased demand for Russian grain with delivery to long-distance destinations and shipment from deep-water Black Sea ports (to Jordan, Pakistan, Morocco etc.), will not leave room for volatility on the domestic freight market: a reduction in rates is not expected in the near future.
In general, market insiders anticipated that Turkish buyers would start actively buying Russian grain after the Eid al-Adha celebrations; this should have put the freight market in motion. Unfortunately, due to the fall of the Turkish lira, all purchases were suspended, which led the market to stagnation; the rates remained at the same level. Buyers think that due to the high grain harvest this year, producers will soon begin to reduce prices; this should result in an increase on the market. In the meantime, Owners are trying to keep their fleet on a short leg, so as not to miss the rise in rates.
The situation with shipments from Ukraine is quite different. The coaster market there froze last week, and the vessels remained open for a long time. To this date, the rate on the basis of the voyage from Berdyansk to Egypt is about USD 16-18 for a ton of wheat, with a parcel of 5-10 thousand tons. In August, there will be long weekends in European grain-importing countries, so Traders’ activity should be expected only for high-margin contracts. Most definitely, the rates for wheat shipments of 5-10 thousand tons parcels from Ukraine to the Adriatic Sea and the Central Mediterranean will remain at about the same level, and the ceiling limit of USD 20 is unlikely to be reached. On the other hand, decrease is also not expected, but the market will rather be on the side of Charterers.