The freight rates in the Azov Sea continue to grow rapidly. The market met the beginning of the week with rates of USD 44 per ton for 3k wheat parcel. The offer completely ignores the seasonality factor, which does not allow freight rates to stop growing at least; therefore, the rates will not go down as long as there is an abundance of offer on the market. Also, a very limited amount of spot vessels forced Charterers to make deals at inflated rates, so those who needed to close the deal during the week had to overpay for free tonnage. The main problem is that most Owners are ready to work no further than the prompt dates, as they do not want to lose money on the high market. Moreover, many Owners refuse to consider options for long-distance voyages, such as the Adriatic and Spain, even though Charterers are willing to pay for these voyages above the market. In general, now the most preferred destinations are ports of the Marmara Sea and the Turkish Black Sea; though, at the moment there are much fewer sales for these destinations than several weeks ago.
It has been a challenging grain season at the Black Sea market so far with its ups and downs. Some time it was a bad weather, then congestions at Turkish straits. It was a world trend that freight was constantly growing and beating historical numbers and Owners controlled the market. But now it is finally stabile and Charterers do not want to be on a weak side any longer. Despite various open tonnage at the Black sea, Owners are not going to lower their freight. In response, grain Charterers and Traders agreed to make some counter step: they decided not to drop open cargoes to the market in order to make Owners think that cargo flow is down and force them to lower rates. Most of the Charterers say that Owners are in the clouds and still looking for the rates of August and September. It is hard to predict how this move will affect the market; there are contractual obligations, agreements and various tenders’ results still valid. We expect Owners to throw in the towel and agree on Charterers’ terms.