38 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
Events on the Azov region commodity market and its state had an increasing impact on the development of the freight on the 38th week. It has long been noticed that the formation of cargo flows or their restrictions may not only affect, but also bring down the Azov region freight market, which is not as volatile as before. The minimum and maximum thresholds of rates have decreased compared to previous years; this is a very serious challenge for many Owners. Owners of vessels aged more than 30 years are particularly affected. On a low market, they are considered in the last turn, and their ownership cost and operation is higher than that of more modern vessels.
The tender of the Turkish Grain Board (TMO), which was held during the reporting week, formed a sideways vision of the development of the commodity and freight markets for Charterers and Owners. In total, according to the results of the tender, about 440 thousand tons of Russian grain will be delivered. This is quite a large volume; however, the demand for parcels of 3-5 thousand tons with shipment by coasters has declined from Turkey’s side at the moment. It looks as if Turkish Traders decided to try to mark the freight rate, and in a good scenario, to fix it on the growing market. Shipments will be made in a relatively short period of time (from September 23 to October 16) and in large parcels; this should cover the need for goods and reduce the speculative pressure on price formation.
Owners also believe that the number of voyages from the Azov Sea ports will grow, and this will pull the freight market. They have already offered rates at the level of USD 24 on the basis of the voyage from Rostov on Marmara, and at the level of USD 45 and above to Adriatic Sea. At the same time, on the 38th week, the working rate was USD 21 to Samsun and USD 23 to Marmara per ton of wheat from Rostov. However, at the end of September, the market still does not have such amount of cargo, so the rates from the Azov Sea ports cannot continue to grow actively in accordance with Owners’ wish. The situation is different for Russian-flagged vessels, especially those that may perform cabotage voyages. The number of grain transportation from river for roads transshipment is growing significantly; in the meantime, some Charterers may show more flexibility during negotiating rates than for shipments from the Azov Sea ports.
On the 39th week, a standstill in grain shipments is expected, which is primarily resulted by the International Grain Round, which will be held from September 22 to 25 in Gelendzhik. The main part of Exporters and Traders will participate in it, therefore the activity in concluding deals with Turkish Buyers will decrease. This standstill is likely to have a negative impact on the freight market, which may experience a slight drawdown.