46 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The freight market of the Azov region was signed out by extremely low activity of participants on the 46th week. Most Traders and Owners took part in the annual international event Global Grain Geneva 2019, which was held from 12th to 14th November in Geneva (Switzerland), therefore there were almost no new contracts or requests on the market. The market movement is expected on the second half of the 47th week.
Strong offshore winds in the Taganrog Bay led to a critical drop in the water level in the Azov-Don Sea Canal, as well as at the ports of Rostov and Azov. Due to the low water level, it was decided to restrict the traffic, which caused problems with shipments and sailing of already loaded vessels. According to the weather report, a temporary water level increase is expected on the November 20th – 22nd, after which offshore winds will grow stronger again. In light of the current situation, Owners prefer to fix vessels from the deep-sea ports of Yeisk, Taganrog or Temryuk. However, the already contracted cargo from Azov and Rostov, which shipment is now impossible due to low water levels, will be shipped from these ports in any event. In this respect, the Omskiy-type vessels take priority because of their low draft. Bad weather conditions, as well as a negative forecast for the next week, both for the Azov region and the Black Sea, contribute to the accumulation of spot tonnage at the Kerch Strait and ADSC. It is estimated that about 70 vessels are stuck in the region in total.
As a general matter, such situations lead to an increase in freight rates, in so far as delivery schedules are disrupted due to delays, and Charterers are forced to overpay in order to fulfill contracts on time. However, the trend of rates growth was not noticed last week, due to extremely low activity on the market as a whole. On the reporting week, rates were at the level of USD 17-18 per ton of wheat on the basis of voyage from Yeisk to Samsun, and Charterers speculated for further fall. Oppositely, Owners expect that rates may go up starting from the middle of the 47th week.
At the tender on November 14th, Egypt purchased 465 thousand tons of Ukrainian and Russian origin wheat for delivery from 5th to 15th January 2020. 345 thousand tons will be shipped from Russia; shipments will be made from deep water. On the one hand, this will increase the number of transshipments at the Kavkaz roads and, accordingly, increase the demand for the Russian-flagged fleet. On the other hand, it will significantly reduce the cargo offer from the Azov region, which will have a negative impact on the freight market of foreign-flagged vessels in December-January.
Due to the forthcoming navigation end, there is still high demand for Russian-flagged vessels for the grain residues export from river elevators to the port of transshipment or directly to the port of discharge. Over the matter of the high daily air temperature in the region, navigation at the river ports of the villages of Starocherkasskaya and Bagaevskaya (Rostov region) is likely to last until mid-December. Owners refuse to discuss cargoes further than the Tsimlyanskiy reservoir, for fear of not being able to leave the river before the navigation end or get on the commercial locking.
Voyages from Volgograd to the Caspian Sea will also remain workable until mid-December. As to Charterers, they are already poised to pay USD 53 per ton of corn to Iran. The protests that broke out in this country, have affected the work of ports, which resulted in great delays in vessels servicing. Amid the background of roaring demand for tonnage in the region, there were attempts of speculative reducing of rates, but since the main part of the fleet is already fixed for several consecutive voyages, there was no decrease in rates.