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

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

The 38th week in the Azov region began energetically and ended with a small but steady increase in rates. For today, the freight rate ex Rostov to Marmara is keeping at the level of USD 19 per ton, which is USD 1-2 more than a week ago.

Experts associate the market revival with the continued fall in export wheat prices and the results announcement of tenders of TMO (for the purchase of 250000 tons of soft milling wheat) and the Egyptian state company GASC (230000 tons of Russian wheat has been purchased), execution of which has begun on the reporting week.
For the first time in a long time, the Azov region faced a serious lack of spot tonnage. This is due to season-related winds in the Taganrog Bay, which blew all last week and prevented normal navigation at the ADSC. Sensing the upcoming demand, Owners are waiting for higher rates and prefer to fix on the spot. Charterers, who planned to make spot shipments, are forced to raise the rate to fulfill the signed contracts.

Owners prefer short voyages, therefore the voyages to the Black Sea created an overdemand, which puts back the rates growth. As a consequence, there may be a more significant difference between the rates to the Black Sea and to Marmara/Izmir over the next several weeks.

The Black Sea region market is strongly influenced by the actions of a major player in the person of Miro Group, which is controlled by VTB. Many traditional destinations such as Mediterranean Turkey, Egypt, North Africa and Mediterranean Europe are closing with large parcels from deep-sea ports. In such a case, in the wake of rates rising from the Azov Sea, the difference in prices on CIF basis ex Novorossiysk and Azov Sea ports for the long-distance voyages will grow. According to data from experts, this will lead to a reduction in long-distance voyage by the river-sea fleet.

The Caspian market remains stable. Owners still hold the current level of rates, despite the relatively low demand for the fleet in the region. In many instances, this is happening due to rumors about the payment system integration between Russian and Iranian companies in circumvention of the SWIFT system, which should significantly simplify and speed the movement of funds, and return the activity to the normal state of business. According to data from Astrakhan stevedoring companies, the planned volume of transshipment in October should increase by one third, which also stokes the freight market, and rates for prompt fleet are growing faster.