41 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
Despite the expectations of Charterers, the downward trend in freight in the Azov region, which has been going on for more than three weeks, has stopped. During the reporting week, rates still showed a decrease of one US dollar, but this was rather by inertia; it should be expected that the market, if it does not start to grow, will at least remain static. Charterers’ attempts to significantly push the market down with low prices (up to USD 15 on the basis of the voyage from Rostov to Marmara) had no chance of success: the entire spot tonnage was fixed by the end of the week, and the offers were discussed mostly with laycan in the second half of October.
In addition to increasing initiative of Exporters, adverse weather conditions continue to affect the volume of tonnage supply at the moment: break in rhythm of shipments and a rise in the average voyage duration artificially enhances the lack of fleet. Amid the global and domestic grain markets conditions, as well as the weak ruble, there is no reason to expect a decrease in the activity of Traders in the near term. However, if weather factors remain unchanged, there will be an increase in rates instead of growing of the actual volume of shipments; this will be caused more by the desire of Charterers to ship the cargo, rather than by the number of confirmed fixtures.
On the brink of the end of inland waterways navigation, Owners of Russian-flagged vessels, which are working from river ports, are already contracting for the 44th week and making decisions about positioning the fleet for winter, choosing between the Caspian and Azov regions. Now this process is just getting started; it will be possible to draw conclusions about the balance of power for the winter closer to the end of October. Shippers understand that this is their last chance to use inland waterways: otherwise, they will either have to store the cargo all winter, or take it to seaports by land, which is less commercially efficient. Owners will not hesitate to take financial advantage from this situation by raising rates for the “final” voyage.
According to information from agricultural producers, the torrid summer in the Southern Federal District negatively affected the yield of corn (variously estimated, there are expected losses up to 30%). Amid the need to fulfill previously concluded contracts by Exporters, small volumes, compared to the expected harvest, will stimulate price growth in the Caspian region for a long time. By means of it, rates are expected to increase during October; this is a more significant driver for the Caspian Sea than the upcoming end of navigation: there is a chance of a repeat of the last year’s situation, when the Volgograd river port remained unfrozen, which allowed to continue shipments throughout the winter.