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40 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

Last week, the Azov Sea market stood still either literally or metaphorically. The water level in the Azov Sea has fallen due to strong winds. According to the most optimistic forecasts, the water level will begin to rise only by October 10. Freight rates fluctuate within the range of USD 38-40 per ton of wheat to the Marmara Sea, though their relevance is lost due to the market’s freeze. As previous weeks show, it is clear that the market has already been steadily going down; however, by the time the water level raises, freight rates will also grow, since cargo offer will far exceed the tonnage supply at the market. Though, this effect will not last long, as after the surge, the market will continue to decline. Those Owners whose fleet has not got trapped in the Azov Sea are happy to work from the Black Sea ports, where the market is really high at the moment. For example, the freight rate for a 3k parcel of wheat from Bulgaria to Eastern Italy is at the level of USD 60 per ton. Therefore, it will be interesting to see how the falling market of the Azov Sea will compete with the high level of the Black Sea market.

Majority of wheat and barley volumes from the Black Sea for the second half of October was fixed in advance due to weather conditions; new corn crop began to be accumulated at ports and prepared for shipment. For the moment, Charterers are discussing lots for November dates, but due to weather improvements at the Black Sea massive numbers of tonnage is open, and Owners are battling for cargoes and dropping a few dollars to get desirable volumes. The above mentioned Charterers wait until the next week to see if they can get even better freight for spot-sales. Vice versa, Owners who prefer to work with grains now are looking for coal and cement cargo in order to keep their fleet employed.

Indian and Chinese demand supports Persian Gulf urea. The Persian Gulf urea market is having a breakout because of the lack of fertilizers at India and high prices at China. Chinese domestic demand and high local prices has led to the purchase of several import cargoes. During the few days, CIF prices on Persian Gulf market raised over 20%. Cargo flow will dramatically improve in several weeks, and demand for Supramax and Ultramax tonnage at Persian Gulf will take off.

38 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

The new week on the freight market of the Azov-Black Sea region began with a decline. The rate for a 3k parcel of wheat from the Azov Sea to the Marmara Sea fell to USD 42 per ton. Though, this drop turned out to be quite fleeting, as by the middle of the week, rates had increased back to the level of USD 44 per ton. Now there are many open vessels on the market; however, Owners are in no hurry to show their fleet, as they are waiting for spot dates to start working any cargo. The gap in the rates level between Owners and Charterers is now pretty large, so the number of fixtures concluded this week is quite small. Owners are trying to keep the market at the level of USD 46 per ton of wheat to the Marmara Sea, while Charterers believe that the freight market has already dropped to the level of USD 40. Next week it will be clear who will win over the market.

Meantime, a lot of corn will be loaded from the Black Sea ports, and market here will definitely not decrease in near future.

The grain season in Brazil is already over, almost all export quantity of corn and soya was shipped. Brazilian soybean farmers store their crops rather than sell them because they expect prices to rise further as global stocks decline, according to brokers, buyers and sellers of the world’s largest producer and exporter of soybeans. Another reason for the accumulation of crops is fears that the La Niña weather event could limit the next harvest in South America, farmers and brokers said. They also cite an escalation of domestic political tensions that could weaken the country’s currency over the next few months. Farmers hope to force exporters and local processing industries to pay more.

Nowadays, it seems safer to have grain on hand than currency. As one of biggest Charterers said: our last Handymax is under discharging in Central Med, and we will make shipments with soya bean meal for next month.

Chinese government has effectively banned phosphate exports through June ’22. China accounts for almost 30% of world trade. This is bad for global phosphate prices and even worse for those highly dependent on those tons players like Australia. Since most of the market volumes will spread across the other countries-receivers, competition between Traders will increase and the first reaction of the market is the expectation of a decrease in freight in order to catch the lost volumes. However, it is also a good possibility for business to conquer new clients: in the nearest future market can see the new unusual destinations for phosphates. Experts fear that urea will face the similar action from China in nearest future.

36 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

The freight rates in the Azov Sea continue to reduce. The market met the beginning of the week with rates of USD 44 per ton for 3k parcel of wheat. The rates are declining only in directions of the Turkish Black Sea and the Marmara Sea. Due to the repair works of the Canakkale bridge, Owners are less interested in long-distanced voyages, so the rates for all directions further than the Marmara Sea are not reduced at the moment. Contracts that may wait will be fixed next week, so Owners are waiting for which way the market will go. Hence, it appears that the next week will be very active in regards to fixtures, since many Owners are aimed at firmly work on their fleet. Besides, due to the fact that Owners will do this at the same time, it will certainly pull the rates down, because they will create additional competition by doing so.

It has been a tough week for the Black Sea trade. Canakkale bridge repair along with a bad weather affected all the players on the market: Owners, Charterers, Traders. As expected, Charterers lowered their expectations about freight level, but could not get what they wanted. Charterers wanted about USD 2-3 discounts for ongoing voyages and negotiations for the vessels that had a chance to pass the Canakkale Strait because authorities suspended bridge repair works due to bad weather for some days. According to forecasts, weather conditions will be much better next week, and wind will stay calm. Authorities will resume the bridge construction and delays will commence again. Turkish authorities will do massive works on the bridge on 10th of September and finish around 12th. During that period, special permission is required for all types of vessels over 200 LOA. The bridge passage will be regulated by the schedule, so Owners expect congestion over that period and normalization of the situation by 15th of September. Local sources expect closures until the end of the month, and then normal or very less closures will start again. The total extra waiting on the Turkish Straits can be up to 4-10 days in the grain season, which means possible additional costs for Owners; that will definitely affect the market prices.

Meantime, same fleet in the Red Sea is showing aggressive improvement in last year: voyages with fertilizers to the South East Asia region were fixed at almost tripled rate. As one of the good Charterers said, they struggling now to make business with short distanced shipments with fertilizers inside East Mediterranean region; even if Charterers will run around all the market with their offer of USD mid 20s for one-day-in-sea voyage from Egypt to Lebanon, they will meet only USD mid 30s from Owners’ side.

We consider that the market of Handysize and Supramax has suspended its growth over the past 2-3 weeks. Rates are slowly and comfortably declining to the lower side now. Of course, all parties now are not expecting some critical changes, but it is a situation where Owners and Charterers definitely learnt market conditions and adapted to them. Vessels may find suitable cargo without any problem likewise Charterers have a couple of options in hands. In any case freight level for main trading routes are settled down, so it’s unlikely will start to show some improvements. We are looking forward to observe good numbers of quite easy fixtures for the next month.

35 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

There is observed a sharp drop on the freight market after the introduction of export duties on grains. Owners did not believe that the market had gone down in the first half of the week, so they were ready to fix at least at USD 47 per ton of wheat from Azov to the Marmara Sea. By the middle of the week, Owners actively began to show their fleet on the market, but there was no interest in it. The increase in the export duty on wheat by USD 7.7 per ton led to a large reduction in offers. Amount of cargo on the market decreased, therefore Owners became more compliant by the end of the week and were ready to fix at rates of USD 45 per ton of wheat and lower. The most successful Owners were those who had managed to fix their fleet for September at the rates of the last week of August, and now they do not need to bother their heads about arranging their fleet. Next week, another increase in export duties is planned; this means that the market will continue to fall. The main question is how deep the decline of the freight market will be, and when it will come to balance.

This week started with bad weather and heavy winds at the Canakkale Strait. Many vessels ballasting for cargoes at the Black Sea and completing ongoing voyages were stuck. As per Owners, currently nobody knows how long the congestion over the strait will last. Some says 1-2 days, others says 3-4. At the moment, weather influenced more than 40 vessels. Like any delay, it causes some penalties per contract obligations; many vessels will miss the cancelling dates and, as a result, market will face many openings at the same time. Charterers could use this moment to break the current trend and get the reduced prices from Owners. Some of the Owners already aware of the situation and offer some discounts in front of extension of cancelling days. Forecasts say that wind is about 16-20 knots for the time being and it is only getting started. For the beginning of the next week, wind among with the rain will be raging on 32-35 knots which makes impossible to do any loading and discharging procedures which means congestion will continue to grow.

In different locations world shipping, there are various dynamics of freight levels. If we consider Supramax shipments, for example, scrap movements from the Baltic Sea, it is stable for a long time, so 35k parcels high stowage commodity still save level of low USD 40s per ton to Turkey side. In other hand, tonnage with deadweight from 25k up to 35k in the Black Sea is raising and reaches max possible freight level in history. Meantime, same fleet in the Red Sea is showing aggressive improvement in last year: voyages with fertilizers to the South East Asia region were fixed at almost tripled rate.

33 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

Freight rates in the Azov-Black Sea region were growing rapidly during the reporting week. 3k parcels of wheat from Azov to the Marmara Sea were being fixed at the level of USD 46 per ton. For a long time, the pace of change in export duties on grains has been low; many Charterers are actively concluding sale contracts with Turkish partners. The end of the harvest in the southern regions of Russia also contributes to the revitalization of supplies. But at the moment, the market is more interested in what will happen next, since an increase in export duties by USD 8-10 is being seriously discussed; this may lead to a serious reduction in cargo offer on the market and to a decrease in freight rates accordingly. This is exactly what made Owners look for cargo for their fleet more actively in order to have time to fix before August 31. There is expected a large number of fixtures in the last week of summer, but no one promises that it will be easy. Owners will try to fix at the highest possible rates, being wary of the market drop in September.

Handy-size market of the Black Sea remains on a very high level. Owners can choose in a plenty of grain-cargoes, and every open vessel can go for Turkey, Egypt or Tunisia. Libya or Lebanon Traders have a lot of troubles as most of the Owners either work with Israel or prefer not to go for Libya due to political reasons. Almost every time Charterers have sufficient volumes of cargo being ready to load and pay in line with market level. Also Charterers say that Libyan ports increased their discharging abilities in order for Owners to spend less time for discharging at ports, but it is still hard to fix something.

31 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

The freight rates in the Azov Sea continue to grow rapidly. The market met the beginning of the week with rates of USD 40 per ton for a 3k parcel of wheat. Due to the lack of spot tonnage Charterers made deals at inflated rates, so those who needed to fix during the week had to overpay for open vessels. The main problem is that most Owners are ready to work no further than the prompt dates, as they do not want to lose money on the growing market. Moreover, many Owners refuse to consider options for voyages to long-distance destinations, such as the Adriatic and Spain, even though Charterers are ready to pay for these voyages above the market. In general, the most preferable destinations are now the ports of the Marmara and Turkish Black seas.

Charterers cannot stop rise of coaster rates in the Black Sea due to lingering fleet shortage for August dates; freight rates for small coasters fleet continue to grow gradually amid the further growth in wheat exports from ports of Russia, Ukraine, Romania and Bulgaria. Owners feel the hunger of Charterers as they have been attacked with same cargoes via different channels; as a result, they can dictate their conditions and not willing to bargain freight-wise at all.

Main victims are the participants of TMO tender, who usually dump prices a little in order to win the tender counting on good relations with some close Owners. Within a week, prices have risen by USD 5; those who hoped for Friday fixing now thinking to pay the penalties for non-delivery rather than pay the freight from their pocket. Charterers advised that two TMO tenders in a row were cancelled without an official reason, but it’s obviously because of market’s hike.

Vessels are leaving Rosario and having to cut cargoes by 25% due to severely low water levels; according to the head of the local ports chamber, the area expected to stay dry for months. Bearing in mind that the majority of the Shippers could not support the Consignees with additional freight increasing due to the dead freight occurred, Charterers are taking all possible measures to deliver the cargo to the nearest deep-water ports and trying to organize the roads transshipment where possible in order to have better freight rates and minimize the loss. So if you look for additional reason for the freight market rocketing: here you go. TCE from Rosario to Continent with grains for 32k vessel is USD 43500.

30 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

A new week began with a fall on the Azov-Black Sea freight market. The rate for a 3k parcel of wheat from Azov to the Marmara Sea decreased to USD 36 per ton. But this fall turned out to be quite fleeting, as rates grew back to the level of USD 38 per ton by the middle of the week. Some Charterers hope that the market will not go above USD 40 per ton, since at that rate, shipments will become more cost-efficient from the Black Sea ports, where the appetite of Owners is whetted, but not as much as of the Azov ones. In the near future, it will be possible to get a clear vision whether the market will go above USD 40, and how this will affect shipments from the Azov Sea.

The dry bulk market is expected to post additional gains in the weeks to come. Increased commodity trade has resulted in port congestion mounting to multi year highs. Port congestion worldwide is also affecting the supply side. According to various estimates, the global breakdown of supply chains will recover from six months to three years. During this period, freight rates in both the Atlantic and Pacific will continue to grow. Time charter rate in Atlantic was USD 33k from the standard route from ECSA to MED. In Pacific, from CJK to WCI/PG, the rate was USD 34k, which is known as peak performance since the beginning of the year.

Many Traders say that there are not much commodity sales on the Far East region. As we were advised, Charterers switched to ‘private & confidential’ way of doing business in order to calm down the market. Thus, the agreements are not officially open to the market. Reportedly, TC rates for voyages from the Black Sea for Supramax with grains have reached the peaks on USD 55-60k per day. We also see an activity of the smaller/coaster tonnage, which freight level is growing at a much slower pace.

Various grain Charterers who don’t own fleet are afraid to take freight responsibility and prefer to sell on FOB basis. Grain giants either ship with their tonnage or cover everything by contract obligations with major Owners. That makes impossible for Handy-size Owners to find spot cargo on the market to usual destinations ex Black Sea to Egypt, Turkey and Libya, as it all goes off-market.

If cargo eventually drops on the market, Charterers are waiting for good rates, as competition is usually between 3-4 options. Handy parcels ex Black Sea to Libya last week was fixed at the level of low 40’s despite some of the Owners are in the clouds and asking for 50’s for the same voyages, so they remain with spot vessels in the end.

29 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

European and Asian Owners avoid calling Indonesian ports because of epidemiological situation in this country. Owners advised that they are afraid that vessel can be quarantined for two weeks or most probably, crewmember might be infected with COVID-19, and the whole crew will be changed. Charterers of coals, petroleum gases, iron and fertilizers who usually trade to Indonesia now are trying to find solutions to ship their parcels to close countries as Malaysia or Singapore, and different ways of transshipment. Moreover, some of the Owners refused to go to Indonesia during the current voyages despite the signed charter parties and risk of penalties, so Charterers are forced to find extreme solutions to change discharging ports from Indonesia.

Situation with Asian ports also complicates by typhoon In-Fa. The operations in the ports of Shanghai and neighboring regions were terminated. The shutdown of seaports will affect container traffic and bulk cargo such as grain and fertilizers, and rates will go higher in this region.

In the 30th week, a slow pace trend on the grain trading has been revealed. Reportedly, this had happened due to the lack of grain commodities in Traders’ hands. Producers now are trying to postpone the sales. The freight market reacted accordingly, thus, lots of open tonnage had occurred besides the failing on subs vessels. The situation on the freight market is not clear yet; there is observed the lack of cargoes from the Continent and the Black Sea. On the other hand, there are lots of opening positions at the aforementioned areas from coasters up to Supramax tonnage, and Owners are still trying to get the best freight level from Charterers as possible. Some say that on the next two weeks, rates will be corrected slightly.

Tunisia reports that the protests caused by the resignation of the government might result in port congestion and the reduction of import volumes of goods. By this moment, not any official statements regarding suspending of port operation announced. However, some Owners already reject cargoes for Tunisian destination and some of them increase freight rates sufficiently. As we see, Handy size vessels from the Black Sea to Tunis on late July dates are fixed on mid 40’s.

The riots situation in SAFR region has stabilized during the last week. However, additional case resulted from the cyberattack to Transnet Port Terminals reportedly on 22 July caused the supply disruptions both Bulk Containerized commodities. In the middle of the SAFR’s citrus export season, malfunction of the logistic systems both railways and tucks delivery resulted in the domino effect. This has leaded to more than 3 weeks congestion reportedly revealed at Durban port.

We also see that almost all of the major ports worldwide are congested. Besides the heavily congested ports of CJK, Indian and Sea Asia regions, Israel port’s congestion is mostly caused by the lack of stevedores; at Haifa, it’s 2 up to 6 weeks at anchorage for coasters up to Handymax vessels; at Ashdod port, 3 up to 4 weeks at anchorage for coasters up to Handymax fleet. In SAFR region, Durban and Richards Bay: 2 up to 3 weeks for Handysize up to Supramax; Port Elisabeth: 1 up to 2 weeks for Handysize up to Supramax. In US Gulf and Lakes region, 2 up to 5 weeks for Handysize up to Supramax. In ECSA region, Up-River: 1 up 2 to weeks for Handysize; Vitoria: 2 up to 3 weeks for Handysize up to Supramax.

As we see, the situation does not changing for better due to lots of reasons such as COVID 19, grains and fruit seasons, bad weather conditions, rising demand for goods etc. We understand that it’s impossible to stop the shipments and redistribute the lines. Thus, in a year perspective, the freight market will continue hitting the tops despite local corrections.

27 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

Freight rates in the Azov-Black Sea region continue to grow. The rate for a 3k parcel of wheat from Azov to the Marmara Sea had reached USD 34 per ton. Last week, most market participants concluded deals in advance, so due to the beginning of the holidays in Turkey and the non-working week, the freight market of Azov Sea actually froze. There are cargo offers on the market in the same amount as a week earlier. Though, Owners are not in a hurry to cut deals at all, as they are waiting for the end of the Turkish holidays to size up the situation on the market. Many Owners look positively at the beginning of August and predict that the freight rate for a 3k parcel of wheat to the Marmara Sea will reach USD 37 per ton.

Despite vaccinating sailors by some government, most still rely on vaccinations in their home country. More than half of the 1.6 million seafarers worldwide are from countries such as India, the Philippines or Indonesia, with these countries lagging far behind other countries in terms of vaccinations.

Either the crew or several members will be sick with coronavirus, or they will not be vaccinated, therefore, will not be allowed into the port. This leads to the fact that crewing companies struggling to find members, so the number of ships in operation will be reduced and new disruptions in supply chains are formed. Vessels are forced to stay in ports without employment while waiting for the crew to arrive or current crewmembers must work for 8-9 months in a row, which could lead to great fines for Owners. That is a bad news for Charterers as Owners want to recoup fines, which will affect working freight level for an extra USD 1-2.

South Africa’s Durban port has suffered major disruption after days of unrest, and operations have also been badly affected at the Richards Bay port and on a national freight rail line, logistics and freight companies said on Wednesday 14/07/2021. From 24.00 on Sunday, 11 July 2021, until further notice the various SAFR Terminals reduced the volume of the cargo handling.

In this regard Owners try to avoid SAFR ports and considering ballast passages to both ECSA and PG/OG range. For example, a voyage with fertilizers from the Red Sea to Malaysia was seen at mid USD 50’s for 33k vessel. Also, for 12k dwt vessel from WCI to West Mediterranean with steel was seen on low USD 90’s.

Besides, steel from PG to Continent for 35k vessel was fixed on USD high 60’s. An unexpected gap in freight rates at EAFR/SAFR/WCI/PG won’t last long. In general, most Owners in Continent/Med turned on the spot regime, collecting the best freight. Charterers at the same region are mainly preferred to hold the cargoes as much as possible, at least trying to fix it off market. A voyage from the Black Sea to Egypt Mediterranean with grains was seen for low USD 30’s (USD 32). A voyage from Continent to West Mediterranean with grains was fixed at high USD 20’s.

26 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments

During the reporting week, rates in the Azov-Black Sea region began to grow. Freight level for a 3k parcel of wheat from Rostov to Marmara reached USD 33 per ton. A sufficient number of goods offered on the market allows Owners to make optimistic forecasts for the next few weeks. However, there are several factors that may cause difficulties with shipments. Firstly, it is bad weather and hurricanes in the southern regions of Russia, which seriously damaged the grain harvest. And secondly, many producers have just started harvesting, and the formation of parcels will become possible only nearer mid-August. Therefore, by the end of the month, a gap between Owners’ ideas and rate level that Charterers are ready to pay may occur.

Despite last week expectations that the Black Sea will drop a little before the new grain crop season, market continued to grow steadily. Having lowered their rate anticipation, Charterers were unpleasantly surprised that Owners had raised their rates in return. So now, Charterers who were checking some ‘sub sale’ possibilities, witness sky-high twenty dollars gap making it impossible to work on such levels. Market excitement is also supported by very active shipments of steel products: new export duty will apply on August 1, and Russian exporters hurry up to ship maximum possible volumes before the introduction. In general, it is safe to say that tonnage demand in the Black Sea will be high, and fight for the vessels will be furious for upcoming months. Owners are rubbing their hands in anticipation.

The demand for such commodities as iron ore, coal, aggregates and clinker increases the freight levels and time charter rates accordingly. There has not been observed a sharp increase, but the systematic upward movement of the freight market in the Atlantic was revealed.

Voyage with agriproducts for 32k dwt from Damietta to Jorf Lasfar was fixed at USD 38 pmt.

Voyage with grains for 31k dwt from Russian Black Sea region to Egypt Mediterranean was fixed at USD 35 pmt.

Coaster tonnage of about 8-10k dwt on same direction from the Black Sea to East Mediterranean was seen for USD 40’s.

Continent market is still on the low side, thus from ARAG to Algeria, the vessel of 30k dwt was fixed with grains at level of USD 34 pmt.

Israel ports congestion is still there. According to local agents, the waiting time is about 2-3 weeks for the coasters/Handy tonnage. The steel parcels from the Black Sea to Israel for 20k dwt vessel was seen at high USD 50’s pmt.

In EU, analytics show very positive expectations of wheat in France, Romania and Baltic countries. This season probably will show some changes in supplies.

The main routes of grains seem not changed, but some differences can be considered. China already purchased about 1 million tons of wheat from France, and according to some rumors, it will be transported with 300k dwt ladies. Therefore, it seems like option for Germany and Baltic countries to have more activity with exports to Algeria; Iran is also expected to remain a major outlet for German wheat. Besides, tenders for wheat were held in Jordan and Saudi Arabia, where on Monday SAGO purchased around 505k tons of wheat, and origins offered were the European Union, Black Sea region, North America, South America and Australia with the seller having the option of selecting the origin supplied. Regarding Ukrainian crop, this year total grain exports almost double up compared last year and already stand more than 500k tons, plus Ukrainian producers have now harvested more than 1 million tons of new crop barley. China will put out 23.488 KMT of imported corn from Ukraine to tender on 16 July.

Few words about freight levels: The Handies for Inter Med have increased up to USD 27k/d basis Canakkale, and the voyage to the Continent is at USD 28k/d. The Transatlantic voyages are now approaching USD 30k i.e. 26-27k to USG, and USD 25-25,5k to the ECSA. The voyage to the Far East is priced in the mid USD 30k/d.

Supramax rates remain roughly the same as last week. A voyage with scrap by a 56k dwt vessel from Baltic to East Med was fixed at USD 35k/d DOP Riga, and at USD 36k/d by a 58k dwt vessel open lower Baltic.