On the 40th week freight rates in the Azov region showed long-awaited activity and continued to grow for the third week in a row. They were supported by the strengthening US dollar, which made it easier for Traders to conclude deals. The inert dynamics of shipments in the first months of the current season has led to the accumulation of significant stocks by shippers. Exchange rate fluctuations play a big part for them as far as activity on the market increases sharply with the jumps in the exchange rate. On average, freight rates increased by USD 2-3 within a week. Now the working rate from Rostov to Marmara is at the level of USD 22 per ton of grain, against the average rate of USD 19 a week ago.
Bad weather in the Adriatic Sea favored the rates growth. Strong winds and rains made it difficult for vessels to return from this region, and the tonnage supply in Azov decreased. Owners are ready to discuss prompt dates, but they give ideas around USD 2-3 higher for 41st-42nd weeks. It is worthy of note that rates have already begun to fall gradually by USD 1-2 per week in the same dates last year (41st-42nd weeks of 2018), and this year the market is picking up speed oppositely. It is still possible that the record harvest will show itself, and we will see the real grain season, though with some delay.
Long-distance voyages are not in favor as far as Owners prefer the Black Sea and Marmara Sea, trying to make as many voyages from the river before the end of navigation. From mid-autumn, the market will begin to offer beet pulp, which is traditionally shipped to Italy, Spain and Morocco. This will increase cargo offer and give a boost the rates for long-distance voyages.
With existing freight rates for grain, coal continues to be more interesting because of the lack of idleness risks due to weather conditions. However, since Charterers and Traders on the coal market prefer to conclude contracts of affreightment and rarely work in the spot, the October program may be considered closed with the tonnage, which was fixed in the last week. Non-weather cargo offers will still be interesting for Owners who work from the Azov Sea ports, but the fleet demand for non-grain cargoes is pretty weak.
According to the data from port agents, the possibility exists of significant water level fluctuations in the Azov region on the 41st week. This may lead to a powerful increase in rates from Azov and Rostov, while freight rates from the deep-water ports of Yeisk and Temryuk will show a more restrained growth. According to the gauging station, as at the end of the reporting week, the water level at Rostov was 12 cm above zero, having fallen by 25 cm for the previous 24 hours. Many Charterers already had to pay extra for the bridge passage at Rostov. Most Owners prefer not to risk entering Rostov and Azov, moving their vessels to the deep-water ports of Yeisk and Temryuk.
The freight market of river ports is still overheated. There is no lack of cargo offers, but it is necessary to ship these cargoes before the end of navigation, in order not to arrange rail transportation to Rostov later, or to leave in storage until next year. Vessels will have time to make another 1-2 voyages at most, and when negotiating cargo from the river, Owners have the upper hand most commonly. Being picky, they dictate inflated rates and fix the vessels closer to the spot dates.
The Caspian market is growing faster than the Azov one, largely due to the news that Iran has signed the Temporary agreement bill for establishing a free trade zone with the Eurasian Economic Union. Apart from the simplifying of the payment for goods procedure, it also means that Iranian vessels will be able to work in transit between the Caspian and Black Seas along with Russian, Azerbaijanian and Kazakh ones. However, currently in the region there is still a lack of the Russian-flagged fleet. The number of cargoes on the Caspian Sea increased, which raised the average rate for voyages from Astrakhan to the level of USD 30. The main demand for spot tonnage is formed by the Volgograd region. In order to insure against a possible sharp rates jump by the middle-end of October, some Shippers try to fix the vessel for several consecutive voyages to be sure of fulfilling contracts on time and at a set rate. Shipments from Aktau (Kazakhstan), where part of the vessels switched to work, were more active during the reporting week. Experts anticipate further rate growth in the Caspian region on the 41st week.