51 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The 51st week was marked by a decrease in the activity of Traders in the Azov region. There still remained demand for spot tonnage, as many Charterers were looking for vessels to have time to make their shipments before the New Year celebration and to have the possibility to start the voyage before December 25. This was primarily due to the increased risks of idleness during the holidays, when the paperwork or loading operations may delay its departure until 9 January 2020. However, most part of the fleet was opened only after December 27, and the shortage of spot tonnage led to the fact that rates did not decrease, and sometimes even grew. The working level of freight was at the level of USD 21 per ton of wheat on the basis of the voyage from Rostov to Samsun.
Most of the shippers sum up the results of the year, and many of them are already leaving for the New Year holidays. There is no demand for prompt tonnage; most likely, there is expected a serious decline on the market. Early in January, there may be a large number of fleet looking for cargo, and rates on the basis of voyages from the Azov ports to Samsun are likely to fall to the level of USD 17-18 per ton of wheat. The experience of the past years shows that there will remain odds in favor of the tonnage supply in the first two weeks of January in the Azov Sea, and much will depend on how quickly domestic shippers will resume their activity. During this period, there are usually popular long-distance voyages to Mersin, Iskenderun, Egypt. There is no point to wait for the rapid growth of the Azov market after the holidays because of the pressure exerted on it by shipments from Novorossiysk; Owners of coasters may suffer a shortage of cargo. In such circumstances, the demand for non-weather goods may arise, such as coal, pig iron, scrap, which can be quickly loaded and discharged, and the documentary processing for which is much easier.
As for long-distance voyages from the Azov ports, grain is shipped mainly to Italy, Spain and the countries of the Western Mediterranean Sea. However, not all Owners in the region are ready to perform such voyages. During the reporting week, they did not favor much the European direction; starting from the 52nd week, there is expected low activity on such voyages. The approaching Christmas holidays in Europe will last from 24 to 26 December. This, firstly, will significantly reduce the number of new contracts; secondly, it will complicate the process of settlements for the already concluded contracts, since European banks will also not work these days.
Many Charterers agree that the January forecast for the grain market is yet unclear. On the one hand, producers still have a lot of carry-overs, and they are not in a hurry to part with their goods, as they are expecting rates fall after the New Year. On the other hand, recent tenders show that there will be enough cargo on the market, and the price may rise. Therefore no one is eager to sign new contracts at the moment; everyone prefers to wait for their partners return after the holidays to push off from the current market conditions.
In the Caspian region, favorable weather conditions have intensified rumors that Volgograd ports may continue to work throughout January. This moved the ground point of activity from Makhachkala to the river ports. In the Volgograd and Saratov regions, there remain many carry-overs, which are difficult to deliver to Astrakhan by road because of weight control. Makhachkala and Volgograd remain an alternative, while the cost of delivery to Volgograd is significantly lower. In general, there is a steady demand for tonnage in the Caspian region, but Exporters refuse to take vessels for the holidays, so the market began to decline slowly.