Freight rates in the Azov region continued to grow on the 49th week. The main driver, same as previous week, was the lack of spot tonnage. Cargo offer significantly exceeds the number of vessels opening after discharging, and Owners usually fix them in one day. During the reporting week, rates were at the level of USD 21-22 per ton of wheat on the basis of the voyage from Rostov to Samsun; so far, Owners are keeping the negotiating advantage.
The fleet inflow is expected in the second half of December after its discharging at Turkish ports. According to data from Traders, the growing price of domestic grain is putting a brake on the conclusion of new deals. Against this backdrop, a moderate increase in freight rates is projected in the month. There will be few opening positions; vessels performing long-distance voyages will not return this year, and there are no cargoes on the market for 2020.
Many Owners are trying to set up schedules for their vessels in such a way as, firstly, to exclude ship calls to European ports during the Catholic Christmas, and secondly, not to be trapped at Russian ports during the New Year holidays in early January. Experience of previous years has shown that the demand for tonnage is greatly reducing at the beginning of the calendar year; it then takes Exporters at least three weeks to rock themselves and to restore the pace of shipments to December levels. Owners favor long-distance voyages to the Mediterranean Sea, they are ready to make discounts in order to avoid long idleness during the New Year holidays.
Egypt’s state grains buyer GASC has purchased 345 thousand tons and 295 thousand tons of Russian wheat at tenders on November the 14th and December the 4th, respectively. Shipments for both tenders should begin immediately after the New Year and complete by the end of January 2020. It is to be expected that there will be very few spot shipments of wheat from the Azov Sea on the market in January, as the main volumes will be shipped from Novorossiysk port and partly from the Kavkaz roads. Considering the usually low demand for tonnage in January, this could lead to a significant reduction in freight rates in early 2020.
Positive daily temperature still remains in the Volgograd region. After the official navigation end on the Volga River and the Volga-Don Canal, till the 15th of December there remains the possibility of commercial passage of locks, which is paid by Charterers. This allows them continuing to make shipments from Volgograd ports; this in turn significantly supports the freight market in the region, which is kept at maximum annual values. Owners still have a wide plenty of suitable voyages to choose, as the market has a steady demand for tonnage, both from Astrakhan and from the Caspian Sea ports. Amid rumors about the lifting of the Iranian embargo on wheat imports, it may be concluded that the market is favorable for Owners during the winter period.
As expected, upon the navigation end freight rates from Astrakhan began to grow in the Caspian region. First of all, this is due to the forthcoming Iranian holidays and the closing of annual contracts. During the reporting week, rates are at the level of USD 40 per ton of corn on the basis of the voyage from Astrakhan to Iran. After the New Year, there may be a reduction in rates.
According to incoming information, restrictions were imposed on the transportation of grain in the Astrakhan region, and the main part of the cargo flow was reoriented to Makhachkala. There is observed that Shippers try to take a Russian-flagged vessel for several voyages at an agreed rate. Most likely, the market will continue to grow next week.