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

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

Freight level in the area is still decreasing, following the dramatic increase of prices on wheat basis FOB Azov ports. Major reasons are:
1) During December 2018 there has been held 3 tenders by GASC, within which about 470 000 mts of wheat of Russian origin have been contracted (part of these volumes’ price hit season-high record) with delivery dates end of January – beginning of February. Producers currently consider it to be more profitable to sell goods via Novo or Kavkaz to support this program to Egypt, therefore amount of coaster shipments have declined noticeably. Such a low demand for sea-river fleet has impacted directly on local freight rates.
2) Grain prices have also been affected by unofficial recommendations issued by Russian Ministry of Agriculture to major Traders to reduce the export pace in order to sustain balance on the inner market. According to official data, currently exported volumes overcame previously planned 40 000 000 mts of wheat, so the intention to limit the shipments within 42 000 000 mts till the end of 2018-2019 grain season has occurred. Such measures are aimed to avoid shortage within country and consequently to avoid unrestricted prices growth for domestic consumers.
The decline of wheat cargoflow in the area has already reached the level at which amount of open tonnage plays into the hands of Charterers with non-grain cargoes, such as coal and steel products. Few weeks ago grain clean vessels refused to even consider other cargo orders, now several Ship Owners have already changed their preferences.
Starting from 23 of January to 28 of February, railway bridge at Rostov is under repair jobs. During this period, vessel passage will only be possible when bridge girder is elevated. According to information from local port agents, waiting time my come up to several days, moreover passage will be only allowed in case of gathering of “substantial” number of vessels. Due to the above, very few Ship Owners are now willing to discuss loading after bridge, freight difference, compared to terminals before bridge, have grown up to 2-3 usd and during the negotiations Owners insist on counting time lost for bridge passage on Charterers’ account.
Despite the ongoing market decline, Ship Owners are not keen on fixing their tonnage ahead, especially vessels with opening dates on end January – beg February. They are hoping for market recovery and rates improvement, sometimes even till ship is in spot position. Most of them are no longer prioritize short or long voyages, as sole aim now is to avoid vessel idling.
Perhaps the most difficult times now are for 5000 dwcc sea-river fleet Owners. All in all Traders activity is weak in the Azov and the bigger the parcel the harder it is to conclude sales contract. Some time ago 5k-tonners held higher rates than 3k-tonners, nowadays freight for such fleet declining at highest pace.
Caspian freight downfall has slowed down during the previous week. Almost all market participants have returned to business after prolonged holidays and trade activity started to recover. Iranian demand for corn remains stable and, according to common expectations, shall strengthen within next few weeks. It is supported by Iranian government – recently, it introduced tender for purchasing of 300 000 mts of corn and 300 000 mts of feed barley with delivery dates of February – March, that is why more and more Traders consider the redirection of their cargo flows towards Caspian ports, where price on corn is quite attractive.
The stabilization of workable freight level in Caspian area is also dependent on unfavorable weather conditions, as almost whole week 3 there has been storm at sea and strong wind up to 25 m/s. Due to this, portcalls schedule was broken, shipments suffered delays and artificial fleet deficit has occurred in spite of actual weak vessel demand.