As anticipated, prolonged idleness of the fleet in the Azov Sea on the 48th week resulted in the growth of freight rates in the region. This is attributable primarily to the lack of spot tonnage. The major part of the fleet will open in mid-December, forcing Charterers to raise offers to find a vessel in due time. Owners are trying to enter into contracts when their vessels approach Kerch, thereby collecting the best offers on the market. If at the week’s beginning the rates were at the level of USD 19 per ton of wheat on the basis of voyage from Rostov or Azov to the Black Sea Turkey, then to the week’s end Owners asked for USD 1-2 higher. As for Charterers, they are taking their time to confirm higher rates. Those of them who are ready to work in the middle and second half of December set the rates below USD 20 per ton of wheat on the basis of the voyage from Rostov to Samsun. In their opinion, the current level of prices on the commodity market does not allow to pay more.
Due to bad weather in the Azov Sea on the last week, the main part of the Turkish ports was not busy, and there were no queues for discharging and loading. It is expected that in the near future, when most of the fleet will simultaneously arrive for discharge in Turkey, large congestion may form. This is likely may affect the level of freight rates, since the shortage of available tonnage is occurring for a little while.
During the reporting week, Owners favored cargoes from deep-sea ports, such as Yeisk and Taganrog. Rates for voyages from these ports have barely risen in recent weeks. Among the deep-sea ports, Temryuk stands apart. Since the dredging operation was carried out, some of its berths’ depth allows handling vessels with the draft of more than 5 meters. This makes the port accessible for sea-type vessels with the cargo capacity of up to 3000 tons. In light of the fact that Temryuk does not usually impose ice restrictions, rates for voyages from this port will be more affordable as compared with other ports in the region.
Owners of the fleet from Turkey and Ukraine, who do not consider the Azov ports as home ones, feel a little better. Some of them work from the Ukrainian ports, since the rate per ton of wheat on the basis of voyage from Kherson to Marmara is about USD 20, and it is almost always possible to find the backhaul cargo there.
Observation showed that the grain market environment in the Azov-Slack Sea region has not changed much in comparison with the previous weeks; the main driver of growth will remain weather conditions, which strongly affect the supply schedules. It is expected that the Owners’ position will continue to strengthen from the beginning of December until the New Year holidays. In addition to the accumulated cargo volumes, this will also be facilitated by the traditionally declining ruble exchange rate at the end of the year.
By the end of the reporting week, the imposed on the 26th of November ice restrictions were canceled due to warming in the Azov Sea. However, from December 11, there are introducing the ice dues in amount of approximately USD 1000 for 3000 ton vessel in the Azov ports. Owners will try to pass these costs on to Charterers, adding this amount to the rate when entering into a contract. According to data from Owners, the river is also gradually closed by ice, and most of them refuse to go for loading to the ports such as Bagaevskaya or Volgograd. Rates for voyages from the river grow faster than for voyages from seaports.
Despite forecasts of a decrease in demand for tonnage at Astrakhan, the Caspian region is holding an excessive demand for vessels. Although Charterers spend more time on forming the parcels, the demand on the part of Iran remains stable. A large number of cargo offers from Astrakhan, Makhachkala and Aktau led to the fact that Owners seized the initiative on the freight market. Rates for voyages from Astrakhan grew to the level of USD 40 again, and the decrease is not yet expected.