43 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
On the week 43 Azov market looked sluggish, as major part of local fleet has been employed with very few spot openings and Owners were not keen on fixing ahead. Freight-wise almost nothing has changed: workable level from Rostov to Samsun amounted to 21 usd pmt. Several factors have restrained the market growth:
Firstly, wheat FOB prices at Rostov is currently well above the level, at which it is possible to plan long-term contracts. Shippers are forced to keep up with Novo, where higher price tempt the producers to deliver their goods there. Another supportive fact is slight weakening of usd to rur ratio, which stimulate the price growth.
Secondly, in the light of negative news regarding bad quality of Russian wheat delivered to Vietnam, there has been a break in negotiations with Turkish buyers, who exercised ‘wait-and-see’ approach. Consequently very few sales contracts have been concluded on end-October – beg-November.
A lot of Ship Owners refuse to believe in market stagnation and postponed fixtures of their opening fleet to the next week. During negotiations they advise 5 usd higher than real market level, hoping that Charterers shall improve their bids. This also may cause the opposite effect: increase of spot tonnage followed by rates decline. To these days most Owners consider short-leg voyages as the best course of action, which due to high turnover provide more profit and due to same reason shall speed up the fall if the rates start to decrease.
Taganrog bay still suffers from the strong winds, affecting water level and aggravate the issue with permissible draft level at ADSC. Still, the voyages ex Yeysk, Temryuk and Taganrog are in great demand, while lack of cargo orders pushes the Owners to consider risky business from Rostov/Azov with underload if only to avoid time losses and sustain continuous fleet traffic.
Caspian market is on the rise with abundance of cargo orders and continuous improvement of already high rates. Severe lack of Russian-flagged tonnage, which is already in full employed on voyages ex river ports to Iran, shall only escalate the closer we are to navigation end. Part of the fleet are now finishing their last voyages in Caspian region and will then take transit cargo to Black Sea, which enlarge the gap between vessels supply and demand. Tendency to start negotiations on spot only is kept, as Owners try to maximize the profit from every fixture, which is quite easy now.
Due to draught in Iran, part of the local producers has refused to sell wheat to the state at offered price. Chances are, Iran may temporarily let loose the ongoing embargo and start to import wheat. In this case, winter period shall see improved fleet demand and higher rates. Currently Ship Owners are exploring opportunities to sign winter-long contracts whereas indicative rates are fluctuating around 20 usd pmt from Caspian Sea ports and around 30 usd from Astrakhan.