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

The Azov region market was still facing post-holiday pressure on the 3rd week. Many Charterers have a hard time returning to work from holidays; trading is lukewarm, and the tonnage supply still exceeds the demand for it. There was a small abundance of spot tonnage in the region, which did not allow Owners to turn the tide. Freight rates were at the level of USD 20 per ton of wheat on the basis of the voyage from Rostov to Marmara; in December, Charterers were ready to pay USD 23 for spot tonnage. The fleet is working on the verge of profitability in view of current costs and risks related to ice dues. According to market insiders, a similar situation will continue in the coming weeks. In the present circumstances, Owners favor long-distance voyages with backhaul cargo. This combination looks much more profitable compared to short voyages to the Black Sea; it also allows gaining time and removing the fleet from spot positions.

Hopes for the market revival are associated with the expected supply of Turkish and Egyptian tenders, which can push the purchase price of grain up; this may increase freight rates by USD 1-2 until the end of January. At the tender on January 14, Turkish Grain Board (TMO) purchased 100 thousand tons of durum wheat for delivery on January 25 – February 25 and 550 thousand tons of soft milling wheat. At the tender on January 8, the state Agency of Egypt GASC purchased 300 thousand tons of soft milling wheat for delivery on February 18-29, 2020, and another 240 thousand tons for delivery on March 1-10, 2020. According to experts, however, there is expected no sharp increase on the market, since not all producers and Traders are ready to sell grain at low prices. The cargo will appear, but not as quickly as Owners would like it to be.

Shipments to Egypt will be made from Novorossiysk and from the Kavkaz roads. Shipments to Turkey will likely be made from the Azov Sea ports. The parcels for the Turkish tender will be small, in the amount of 10-15 thousand tons; it will make shipment from the Azov region more profitable than from the Novorossiysk port or from the Kavkaz roads. In this case the Turkish tender will be indicative; it will define a certain price level for many grain importing companies, which may be used as a basis for calculating for future transactions.

There was much excitement among Exporters amid rumors about a possible quota for grain export. The Russian government is considering imposing a limit of 20 million tons of certain types of grain for export from January 1 to June 30, 2020. This initiative aims to protect the domestic market, but it may also lead to a reduction in export shipments, which will eventually result in lower demand for tonnage in the second half of the grain year.

The new year in the Caspian region began with a fall in rates from Astrakhan. Due to restrictions on loading of vehicles, there are still problems with the delivery of grain; but at the same time, there occasionally open vessels that return from Iranian or Turkmenian ports with backhaul cargo. In order to avoid problems with contracts, shippers switch to ports that may accept railcars: Volgograd, Makhachkala, Aktau. This led to a shortage of wagons for grain and warmed up the railway transportation market. Currently, Volgograd is considered a risky port among Owners, despite the abnormal above-zero temperature. Not many Charterers work from the Makhachkala port. There is congestion in Aktau due to the large number of vessels on the roads and in the port, and it is difficult to berth a vessel for loading on time. As a result, shippers begin to suffer losses due to delays.

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.

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

Demand for tonnage remained stable in the Azov region on the 50th week. Some Owners took advantage of the moment trying to offer prompt vessels at current rates. In general, this didn’t really matter for Charterers: the demand for tonnage for period in late December-early January is extremely small. However, Charterers, especially those who work with foreign companies, were ready to pay extra to find a vessel in spot, thereby protecting themselves from the risk of idleness on holidays. Owners have so far managed to keep demand for the fleet, and freight rates grew by another US dollar. The rate on the basis of the voyage from Rostov to Samsun was at the level of USD 23 per ton of wheat.

Russian banks will go on the New Year holidays on December 31; they will not back to work up to and including January 8. This usually complicates foreign trade activities and reduces to a minimum the number of transactions during this period. Shippers are also not eager to interrupt their days off organizing shipments on holidays. All these factors will low freight rates at the beginning of the calendar year. Therefore Charterers having the opportunity to hold their cargoes, move shipments dates closer to the middle of January 2020.

Many Owners working in the Azov region purposefully take voyages from the ports of the Mediterranean or Black Sea to avoid idleness at the Azov ports. Those of them, who do not have sufficient work experience in the sea, quickly confirm the rates; therefore they are highly sought after by Mediterranean Charterers. Rates on back-haul cargoes not intended to the Russian ports are decreasing closer to the year’s end.

During the reporting week there was observed a high demand for sunflower seeds in the Azov region. It was ready to be shipped both in spot and in prompt in parcels of 1000-4000 tons from the ports of Yeisk, Azov and Rostov. First of all, this linked with the increase in purchase prices for sunflower. Owners consider such cargo more eagerly, since the rate is given lumpsum, and the full volume of holds is being used for the maximum draft at Azov.

The rate from the Black Sea ports on the basis of the voyage from Kherson to Marmara was at the level of USD 21 per ton of wheat. The volume of shipments is large, and the situation will not change until the year’s end. Right after the New Year holidays, there should be expected a reduction in rates; however, the market will rise the end of January, because the quality of Ukrainian grain this year is quite high, and the price is very competitive.

Broadly speaking, the market level in the Caspian region has not decreased; the amount of cargo is still large, but it is mainly shipped from Makhachkala and Aktau. Demand for tonnage from Makhachkala has increased significantly due to weight restrictions on the approaches to Astrakhan. Market insiders continue to complain that under current conditions, road transport from nearby regions is impossible to calculate; and there is no way to circumvent the restrictions, because the scales are installed at all entrances to Astrakhan. Shippers are reorienting their cargo flows to more affordable ports, as a result of which the rates from Makhachkala began to grow. The rates from Astrakhan slightly decreased against the background of cargo flow reduction. The rate from Astrakhan to the Iranian ports is at the level of USD 39 per ton of corn, from Makhachkala is at the level of USD 30. Iranian buyers, for their part, are beginning to press Russian partners for the shipment of grain; for failure to contracts fulfillment, they can lose quotas for the import and export of goods, which are very difficult to obtain. From the beginning of January, there is also expected a fall on the Caspian Sea market: a large number of tonnage open in spot will be looking for cargo due to the long New Year holidays.

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

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.

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

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.

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

Weather conditions remained the main factor influencing the freight market of the Azov region on the 48th week. Strong Eastern offshore winds continued to restrain the fleet movement. About 80 vessels were stuck in the Rostov region or on the roads. Over the matter of the large tonnage accumulation, the Azov and Rostov ports administration did not allow the entry of vessels proceeding in ballast for loading. The water level decrease had also affected the passage of the Kochetovskiy water lock and the movement through the Don River.

The current situation did not significantly affect freight rates, and generally they remained at the same levels. This may be explained by the high grain export price of and, as a consequence, low Traders’ activity. Charterers, who are ready to work on these conditions, offer USD 17-18 per ton of wheat on the basis of the voyage from Rostov to Samsun. Owners propose rates at the level of USD 19-20 for the same direction. But while the fleet is waiting due to bad weather, negotiations are delayed, and Owners prefer to fix on the spot instead of fixing on far dates. More likely, the consequences of the fleet idleness will manifest themselves in two weeks’ time.

The grain market is packed with rumors about the forthcoming possible threefold increase in export dues on sunflower seeds. This measure is aimed at strengthening the position of Russian processers, which cannot fill their capacity and unlock the potential for oil supplies due to high export demand for raw materials. The record harvest of sunflower is expected in this year, up to 40% of which was planned for export. Other things being equal, from the introduction of prohibitive duties, domestic grain will lose to cheaper offers of competitors, and the commodity nomenclature of the Azov region may be reduced. In this case, the freight market may fall short of a significant part of the load.

According to the information received, the work period of the Volgograd Lock can be extended until the 10th of December. This should help Exporters to ship more volumes from the Volgograd and Saratov regions, provided that acceptable weather and ice conditions remain settled. In case of extension, the lock will work in commercial mode. On average, a day of commercial pilotage costs about USD 2000, which are divided between vessels passing the lock. Judging by Traders’ activity, steady demand for vessels from Kamyshin and Nikolaevskoye may remain till beg-mid of December; the business marginality of voyages from these ports allows shippers to offset the cost of commercial locking.

The Caspian freight market was under pressure of stricter requirements for weight checking on the approaches to Astrakhan. Some Charterers suspended new shipments until the issue with the local authorities resolving, others tried to solve the situation by cabotage transportation of goods from the river to Astrakhan. As a result, in the reporting week, the demand for tonnage at Astrakhan decreased, and the rates reduced slightly from their upper bounds. It is worth mentioning that this applies only to shipments from Astrakhan; the demand for tonnage from river remains stable.

During the reporting week, Owners of Russian-flagged fleet made the last voyages from the Saratov and Volgograd regions to Iran. Charterers offered rates from the river at USD 5 above the market to ship cargo residues, to close existing contracts and prepare warehouses and elevators for the winter season. Open lots from the Lower Volga are becoming more interesting for Owners who still have time to perform voyages from river ports. Due to the civil unrest in Iran, there was a fall in rates from Astrakhan by an average of USD 3-4, which can lead to a decrease in shipments to this country.

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

The freight market of the Azov region was signed out by extremely low activity of participants on the 46th week. Most Traders and Owners took part in the annual international event Global Grain Geneva 2019, which was held from 12th to 14th November in Geneva (Switzerland), therefore there were almost no new contracts or requests on the market. The market movement is expected on the second half of the 47th week.

Strong offshore winds in the Taganrog Bay led to a critical drop in the water level in the Azov-Don Sea Canal, as well as at the ports of Rostov and Azov. Due to the low water level, it was decided to restrict the traffic, which caused problems with shipments and sailing of already loaded vessels. According to the weather report, a temporary water level increase is expected on the November 20th – 22nd, after which offshore winds will grow stronger again. In light of the current situation, Owners prefer to fix vessels from the deep-sea ports of Yeisk, Taganrog or Temryuk. However, the already contracted cargo from Azov and Rostov, which shipment is now impossible due to low water levels, will be shipped from these ports in any event. In this respect, the Omskiy-type vessels take priority because of their low draft. Bad weather conditions, as well as a negative forecast for the next week, both for the Azov region and the Black Sea, contribute to the accumulation of spot tonnage at the Kerch Strait and ADSC. It is estimated that about 70 vessels are stuck in the region in total.

As a general matter, such situations lead to an increase in freight rates, in so far as delivery schedules are disrupted due to delays, and Charterers are forced to overpay in order to fulfill contracts on time. However, the trend of rates growth was not noticed last week, due to extremely low activity on the market as a whole. On the reporting week, rates were at the level of USD 17-18 per ton of wheat on the basis of voyage from Yeisk to Samsun, and Charterers speculated for further fall. Oppositely, Owners expect that rates may go up starting from the middle of the 47th week.
At the tender on November 14th, Egypt purchased 465 thousand tons of Ukrainian and Russian origin wheat for delivery from 5th to 15th January 2020. 345 thousand tons will be shipped from Russia; shipments will be made from deep water. On the one hand, this will increase the number of transshipments at the Kavkaz roads and, accordingly, increase the demand for the Russian-flagged fleet. On the other hand, it will significantly reduce the cargo offer from the Azov region, which will have a negative impact on the freight market of foreign-flagged vessels in December-January.

Due to the forthcoming navigation end, there is still high demand for Russian-flagged vessels for the grain residues export from river elevators to the port of transshipment or directly to the port of discharge. Over the matter of the high daily air temperature in the region, navigation at the river ports of the villages of Starocherkasskaya and Bagaevskaya (Rostov region) is likely to last until mid-December. Owners refuse to discuss cargoes further than the Tsimlyanskiy reservoir, for fear of not being able to leave the river before the navigation end or get on the commercial locking.

Voyages from Volgograd to the Caspian Sea will also remain workable until mid-December. As to Charterers, they are already poised to pay USD 53 per ton of corn to Iran. The protests that broke out in this country, have affected the work of ports, which resulted in great delays in vessels servicing. Amid the background of roaring demand for tonnage in the region, there were attempts of speculative reducing of rates, but since the main part of the fleet is already fixed for several consecutive voyages, there was no decrease in rates.

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

Over the past 45th week on the Azov market there has not been much change. Freight rates were stagnating due to low Traders’ activity, which was balanced by a small amount of opening tonnage. Russian wheat is higher-quality, and it’s more expensive than competitors’ offers. Therefore Russian wheat sale transactions are rather few; nowadays, bran, sunflower seeds, peas and corn are mainly shipped from the Azov Sea.

The high price of Russian wheat had a negative impact also on the volumes shipped from Kavkaz roads. The main export wheat flow comes from deep-sea Novorossiysk port via parcels of 20-50 thousand tons. Taking into account the delivery to the port, it turns out to be much cheaper than shipping by coasters from the Azov Sea. Due to the lack of demand for tonnage from Charterers working on transshipment on Kavkaz roads, the market is going down. It is expected that in the near future, producers and Traders on the domestic market will be forced to reduce prices in order to increase the competitiveness of the Russian wheat price on FOB basis on the world market.

Due to the lack of Russian-flagged fleet from the river, the demand for the cabotage tonnage has increased in contemplation of the navigation end. Exporters seek to export the remaining volumes under contracts to the ports of Astrakhan, Azov or Rostov, followed by transshipment to the river-sea type vessels. Owners of such fleet continue to fix vessels on spot basis and prefer short voyages to the Black Sea Turkey and Marmara. During the reporting week the freight rate for the voyage from Rostov to Samsun was at the level USD 20 per ton of wheat; significant fall in rates before year-end is rather unlikely due to forthcoming imposition of ice restrictions and charges.

The Caspian market continues to go up. The main drivers of growth are the roaring demand for tonnage from the river at the point of the navigation end, as well as news regarding the memorandum on the wheat supply under government contracts signed by Russia and Iran. Amid the background of this news, many Charterers began to exhibit activity in the conclusion of winter contracts, with the consequence that the fleet turned out to be in even greater short supply than it was before. Shipping corn from Astrakhan is at a rate of USD 40 per ton, the rate from Volgograd is about USD 53 per ton.

The market is also supported by sharply increased demand for tonnage for Kazakh wheat supplies. Before now, local shippers used mostly deep-sea Iranian-flagged vessels for such contracts. This year, however, many shippers refuse to load such vessels because of the American sanctions imposed against Iran. Thuswise, the Kazakh grain cargo flow will compete with the Russian one for the Russian-flagged fleet, raising the rates in the region.

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

The Azov freight market continued a smooth decline in rates on the 44th week. The cargo offer lagged behind the fleet turnover rate, resulting in an increase in the spot tonnage amount, which pulled the market down. Owners accept the decreasing trend, but choose long-distance voyages, which is why rates for them fall faster than rates for short ones. Along with the demand for long-distance voyages, the demand for backhaul cargo is growing.

The main factor determining the low freight rates continues to be grain traders’ activity, which is weak for this time of year. The high purchase price in the domestic market makes Russian grain too expensive compared to the offers of Ukrainian competitors and kills its export prospects. Market insiders expect that in the near future producers will begin to reduce the price of grain because a lot of it has accumulated in storages, and no grain season has occurred.

Based on the quotes of the last major tenders (Egypt, Turkey and Algeria), the Russian origin grain may be among the winners. Experience has shown that such lots are more often shipped from deep water (Novorossiysk port). Many traders believe that the high purchase price of grain in Novorossiysk inhibits exports from the Azov Sea; it’s a lot more lucrative for shippers to ship grain on CPT terms to major players than to ship it on FOB terms from low water.

Azov-Don Basin Administration informed market insiders about the closure of locks No. 1-15 from November 27, 2019 on. There remains the possibility of commercial locking, the terms of which need to be negotiated in advance. Subject to favorable hydro-meteorological conditions, it is possible to extend the work of the locks until December 1.

For the Russian-flagged fleet, the freight market moves into a different segment near the end of navigation. Amid the background of decrease of rates from the Azov Sea ports, the demand for shipments from river elevators remains high, and the Russian-flagged fleet is still in short supply. Freight rates are joining the ranks of non-market.

In the Caspian region, rates have been growing steadily for a month. Seizing the moment, Owners dictate their terms not only for spot contracts, but also for long-term winter ones. Some believe that 2-3 of them are risky, but highly paid voyages in the Caspian Sea are comparable in profitability with 2 of 3 months of work in the Azov Sea in wintertime. This is the most important factor for the decision-making on a matter of wintering in the Caspian Sea.

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

On the week 43 Azov market looked sluggish, as major part of local fleet has been employed with very few spot openings and Owners were not keen on fixing ahead. Freight-wise almost nothing has changed: workable level from Rostov to Samsun amounted to 21 usd pmt. Several factors have restrained the market growth:

Firstly, wheat FOB prices at Rostov is currently well above the level, at which it is possible to plan long-term contracts. Shippers are forced to keep up with Novo, where higher price tempt the producers to deliver their goods there. Another supportive fact is slight weakening of usd to rur ratio, which stimulate the price growth.

Secondly, in the light of negative news regarding bad quality of Russian wheat delivered to Vietnam, there has been a break in negotiations with Turkish buyers, who exercised ‘wait-and-see’ approach. Consequently very few sales contracts have been concluded on end-October – beg-November.

A lot of Ship Owners refuse to believe in market stagnation and postponed fixtures of their opening fleet to the next week. During negotiations they advise 5 usd higher than real market level, hoping that Charterers shall improve their bids. This also may cause the opposite effect: increase of spot tonnage followed by rates decline. To these days most Owners consider short-leg voyages as the best course of action, which due to high turnover provide more profit and due to same reason shall speed up the fall if the rates start to decrease.

Taganrog bay still suffers from the strong winds, affecting water level and aggravate the issue with permissible draft level at ADSC. Still, the voyages ex Yeysk, Temryuk and Taganrog are in great demand, while lack of cargo orders pushes the Owners to consider risky business from Rostov/Azov with underload if only to avoid time losses and sustain continuous fleet traffic.

Caspian market is on the rise with abundance of cargo orders and continuous improvement of already high rates. Severe lack of Russian-flagged tonnage, which is already in full employed on voyages ex river ports to Iran, shall only escalate the closer we are to navigation end. Part of the fleet are now finishing their last voyages in Caspian region and will then take transit cargo to Black Sea, which enlarge the gap between vessels supply and demand. Tendency to start negotiations on spot only is kept, as Owners try to maximize the profit from every fixture, which is quite easy now.

Due to draught in Iran, part of the local producers has refused to sell wheat to the state at offered price. Chances are, Iran may temporarily let loose the ongoing embargo and start to import wheat. In this case, winter period shall see improved fleet demand and higher rates. Currently Ship Owners are exploring opportunities to sign winter-long contracts whereas indicative rates are fluctuating around 20 usd pmt from Caspian Sea ports and around 30 usd from Astrakhan.