44 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The reporting week was as eventful as the previous one. By the end of the week, rates on the basis of the voyage from Rostov to Marmara were at the level of USD 25-26 per ton of wheat on the part of Charterers, while Owners gave USD 28-29 per ton. A large drop in the Chicago stock exchange has pushed FOB prices in the region’s deep-water ports lower; volumes shipped, as well as rates, are rising. The weak ruble against the US dollar also motivates Shippers to sell. The fact that a significant part of grain planned for export has already been shipped from Ukraine suggests that importers will focus on goods of Russian origin: in Russia, the volume of harvested grain is more than 133 million tons, despite the poor harvest of corn and sunflower seeds. It is expected that the increase in rates on the Azov Sea will continue until the last days of November, while the Russian-flagged vessels will still be busy on voyages from the river.
With the end of navigation, the current stable flow of grain cargo at high rates is likely to weaken significantly. This conclusion can be made basing on the plans and mood of producers. Export-aimed regions are located nearer to ports. Those regions located in the Central and Northern regions are more seriously considering the domestic market as an alternative. The current situation on key points (the price from exporters and the logistics component) does not make a foreign trade deal very attractive; this will not change until either new export quotas are introduced, or the ruble exchange rate largely weakens.
In the Azov-Black Sea region, the market of backhaul cargo is on the rise. Despite the abundance of grain offers at relatively high rates, Owners do not lose interest in voyages from Turkey to Rostov or Azov. The flow of such cargo to the Russian Federation remains stable, while the dynamics of shipments to Ukraine has increased significantly over the current year. Shipments are made in parcels from 2 to 10 thousand tons; unlike the Azov market, where the difference in rates between direct and backhaul voyages may be twofold, such voyages in the Black Sea are quoted at the same level.
In general, the coasters market in the Black Sea region is growing. Now Owners are no longer forced to fix any cargo at low rates in order to avoid idleness of their fleet. For a voyage from Kherson to Marmara, the average rate is USD 19. It looks like the most active in the region are Turkish shippers, as well as cargo flow from Ukraine to the Western Mediterranean. Considering the fact that Charterers are ready to pay more than USD 10 for backhaul cargo from Marmara to Odessa, and ballast passage can be avoided, it is safe to say that the current level of the regional freight market is at its peak for the entire 2020 year.