50 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
During the reporting week, the lack of open vessels has occurred in the Azov region due to the increased period of the fleet turnaround. Vessels have been standing near the Dolzhanskaya Spit and waiting for the passage through the Kerch Strait for quite a long time. At the moment, ice convoys for the passage of the Kerch Strait are forming only upon receipt of confirmation from the port of loading. According to forecasts, the situation is expected to improve at the end of the 51st week when weather conditions become more favorable.
During the past two weeks, Charterers making shipments from Yeisk, Temryuk or Taganrog have tried to reduce freight rates by USD 1-2, taking advantage of the fact that many vessels are not currently considering voyages from Rostov. However, the market did not go down due to the lack of spot tonnage, except in a few isolated cases. Amid the fact that shippers need to make shipments before the end of December, the rates for fixtures with laycan for the rest of the month are expected to be inflated.
Christmas and New Year holidays limit the work period for some companies. A chain of banking holidays in the USA, and then in the Russian Federation, forms an undesirable distance of time: due to banking holidays, a transaction party is at risk of not receiving their money, or causing a long vessel’s idleness. This is especially true for companies selling from the Russia on CIF basis: vessels with the nearest opening dates will be a priority for them.
Uncertainty with the introduction of restrictive measures on exports from Russia does not allow the formation of the one movement direction on the commodity market. Amid various news that an export duty on wheat will be introduced separately or together with the permitted volume for export purchase prices have slightly decreased. Prices can be reduced by companies which are export-oriented and already have purchased goods. Producers, for their part, are not in a hurry to decrease their offers.
The market is still facing the low December after the high November. There is an extremely small number of new sales on the Black Sea market, as well as a significant difference in price expectations between buyers and sellers: about USD 8-10. Cargo is available at ports, but customer demand is lower than usual, since notable volumes are being traded via state tenders. Aside from that, parties have different views on the development of the situation with prices, and they are waiting for concrete news on the introduction of export quotas and duties in Russia. Once this is done, either shipments of Russian grain will go in a large number on coasters, and sellers would need to “reduce appetite”, or by contrast, only the major companies of Russia will continue to make shipments, and much of the “market work” will shift to the Ukrainian ports.