35 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
Two weeks of stagnation on the grain market led to the fact that export prices for wheat strengthened the decline. For Owners, the overall picture has not changed. Importers are waiting for the results of the Turkish Grain Board tender; they hope that prices will fall even lower after the results announcement. According to the data from experts, the all-force activity will return to the market by the end of the 36th week. Even with such an optimistic forecast, the freight market will begin to grow only on the 37th week, when the entire spot tonnage will be fixed.
Another driver for the market mid-term reviviscence may be the Egyptian state-owned company GASC tender for the purchase of wheat, which has been conducted on August 27th. It was purchased 230,000 tons of Russian wheat and 60,000 tons of Ukrainian wheat with supplies for the period from 1st till 10th October. This means that shipments will begin nearer to the middle of September, and the 37th week will have a positive impact not only on the market of Kavkaz transshipment, but it also will push up the rates for direct voyages.
Amid sentiment about the likely forthcoming recovery of the market, Owners have changed tactics, and now they prefer to fix the tonnage on a short shoulder voyages, mainly to the Turkish Black Sea, instead of long-distance voyages. As a result, the rates on Azov, Yeisk and Rostov on this shoulder equalized. It’s been difficult to find a vessel for a long-distance voyage last week, and this led to a slight improvement of the rates for those directions. On the growing market, Owners are expected to align with the same strategy, and Charterers will have to overpay for long-distance voyages.
In the Caspian region, the market is broadening out: small exporting companies with no experience of trading with Iran enter the market. Often, they are persuaded to do so by permanent contractors, who thus try to work out a barter trading scheme. There are rumors that some major international Traders have already accumulated about 20,000 tons of unpaid goods at Iranian ports, which led to a pause also in big players’ shipments. At the same time, the threat of interruptions of grain supply to Iran is not yet expected, because Kazakh exporters are moving on to the shipments of new crop grain in the Caspian Sea in the near future.
The new nitrogen fertilizers plant in Turkmenistan is closing for the next prevention activity on September 3rd. For at least a month, the transit cargo offers from the Caspian Sea will be severely limited, and vessels open after the transportation of general cargo will be forced to go up to the river for grain loading towards the Black Sea. Increased tonnage supply in September may slow down the expected growth of rates for this direction.