An unstable economic situation in Turkey continues to affect freight market in the Azov region. But despite this, there still remains a need for Russian grain in the Turkish market. During week 44, the Azov Charterers have been negotiating parcels of wheat ranging from 1,500 to 2,000 tons (instead of usual 3000 or 5000 mts). In such a manner Turkish millers try to minimize currency risks due to high volatility of lira. In addition, a lot of Importers forfeited a credit support of banks, so obtaining credit for a parcel of 1,500 tons of grain is easier than for 3,000. As the most vessels in the area are able to carry about 3,000 tons, Traders were forced to make two sales for one ship. At the same time, trade recovery with Turkish side restrains freight on Azov from a steep fall. Currently, workable rates maintain USD 28 per ton basis voyage ex Rostov to Marmara with wheat. This is 1 USD less than last week.
Nowadays lots of Charterers are in a difficult position, since they had already delivered the cargo to the port terminals and hoped to realize it by the beginning of November. In the context of falling demand for wheat in Turkey, Traders could not sale off grain to clear warehouses. Thus, in order to avoid extra storage costs, Traders reduced the price down to USD 198 per ton of wheat (FOB Rostov, wheat class 3) at week 44.
Another Azov Charterers, who traditionally worked with Turkish Importers, had found a different way to adapt to new market realities. Traders form a joint parcels of grain (about 15,000 tons) for shipments by Handy-size vessels from the road of Kavkaz port to Asian countries (Vietnam, Bangladesh), where there remains high demand for Russian wheat. Certainly, the organization of such hauls requires more time and effort, but such activities allow Traders “do business”, taking difficult market conditions into account.
There was a state of emergency in the Kerch Strait for almost whole week 44 due to the severe storm. For this reason, there formed a queue of ships on the approach and exit from the Kerch Strait. The ships were forced to wait for the end of the foul weather and could not start or end their voyage. In this context, some Charterers canceled the vessels. But by the time when a large amount of tonnage had been opened in the Azov Basin, Traders had the opportunity to conclude new contracts at rates lower than last time. This factor also contributed to the reduction of freight in the region.
Today Caspian Ship Owners, who have signed agreements for several consecutive voyages, try to cancel contracts with Charterers and take cargos on the spot, as the freight in the region, on average, has increased by USD 3 over the week. For this reason, demand for spot tonnage has picked up at week 44. Moreover, Exporters offered to make 50% advance payment upon fixing charter party at current rates. Thus, the average rate basis voyage of the Samara – Iran amounts USD 64 pmt.
In the current season, Russian producers predict a record export of oilseeds. Traders note the growing demand for rapeseeds in Iran. In the future this tendency may expand the commodity nomenclature in the region and lead to further growth rates.