Over the past 45th week on the Azov market there has not been much change. Freight rates were stagnating due to low Traders’ activity, which was balanced by a small amount of opening tonnage. Russian wheat is higher-quality, and it’s more expensive than competitors’ offers. Therefore Russian wheat sale transactions are rather few; nowadays, bran, sunflower seeds, peas and corn are mainly shipped from the Azov Sea.
The high price of Russian wheat had a negative impact also on the volumes shipped from Kavkaz roads. The main export wheat flow comes from deep-sea Novorossiysk port via parcels of 20-50 thousand tons. Taking into account the delivery to the port, it turns out to be much cheaper than shipping by coasters from the Azov Sea. Due to the lack of demand for tonnage from Charterers working on transshipment on Kavkaz roads, the market is going down. It is expected that in the near future, producers and Traders on the domestic market will be forced to reduce prices in order to increase the competitiveness of the Russian wheat price on FOB basis on the world market.
Due to the lack of Russian-flagged fleet from the river, the demand for the cabotage tonnage has increased in contemplation of the navigation end. Exporters seek to export the remaining volumes under contracts to the ports of Astrakhan, Azov or Rostov, followed by transshipment to the river-sea type vessels. Owners of such fleet continue to fix vessels on spot basis and prefer short voyages to the Black Sea Turkey and Marmara. During the reporting week the freight rate for the voyage from Rostov to Samsun was at the level USD 20 per ton of wheat; significant fall in rates before year-end is rather unlikely due to forthcoming imposition of ice restrictions and charges.
The Caspian market continues to go up. The main drivers of growth are the roaring demand for tonnage from the river at the point of the navigation end, as well as news regarding the memorandum on the wheat supply under government contracts signed by Russia and Iran. Amid the background of this news, many Charterers began to exhibit activity in the conclusion of winter contracts, with the consequence that the fleet turned out to be in even greater short supply than it was before. Shipping corn from Astrakhan is at a rate of USD 40 per ton, the rate from Volgograd is about USD 53 per ton.
The market is also supported by sharply increased demand for tonnage for Kazakh wheat supplies. Before now, local shippers used mostly deep-sea Iranian-flagged vessels for such contracts. This year, however, many shippers refuse to load such vessels because of the American sanctions imposed against Iran. Thuswise, the Kazakh grain cargo flow will compete with the Russian one for the Russian-flagged fleet, raising the rates in the region.