Over the past week, the balance of power in the Azov region has barely changed. Charterers ‘ freight ideas remain beyond the pale of profitability for Owners, so most of them prefer to fix their vessels in spot until an acceptable offer is received. Experience has shown that the spot fleet takes on average from 2 to 4 working days to find a suitable cargo. Commonly these vessels are fixed up by Charterers with contracts close to deadline; for them, the dates are more important than the additional margin of USD 1-2 per ton. The abundance of spot tonnage does not allow the market to grow, but there is no further way to decline, so rates remain stable for the second week in a row.
All ice restrictions were canceled in Azov and Rostov due to rising temperatures. Unfortunately for Owners, this factor may have only negative impact on the market: there may be an inflow of coaster fleet with no ice class to the region, which is already overstuffed with the tonnage supply. The Black Sea market is currently not far behind in dynamics from the Azov market, and in the next few weeks there is expected no growth.
Amid the background of grain trade activity tended to zero, the freight market survives largely by means of increased shipments of non-food cargoes. Coal, fertilizers, metals and general cargo are shipped with an unusually high intensity for this time period. Falling freight rates allow Exporters to compete on foreign commodity markets. However, since grain remains the main cargo nomenclature of the region, everyone agrees that freight growth is possible only with the resumption of active trade in this segment.
The Caspian region showed a slight increase during the reporting week. Owners attribute this to grown activity due to forthcoming Novruz Bayram. Many Iranian Importers commonly increase the volume of grain purchases before the holidays. The growing demand for tonnage allowed Owners to overcome a prolonged downward tendency in rates: the market showed growth from almost all ports, except for Volgograd; there, on the threshold of the navigation opening, the difference in rates with seaports is gradually coming to the usual values.
The Azov freight market continued its decline on the 6th week. The fall in freight rates is still dictated by the increase in the number of spot vessels and the lack of cargo in the region. Requirements of Receivers have been covered till March; therefore they enter into negotiations reluctantly and behave aggressively in a bid to knock the price down. Development of the situation will depend heavily on domestic prices for Russian grains. While wheat is falling by USD 2-5 on global markets, its price is far from decreasing in Russia, and it’s even growing in some regions.
Buyers closely monitor the economic situation in Russia, and even fluctuations in the ruble exchange rate are included in the offer, which leaves no wiggle room for sellers. It is expected that the grain price will continue to decline: producers still remain with substantial volumes of grain, while the fleet will work on the verge of profitability. Demand for tonnage may return after determination of the average market price for Russian wheat. Commonly, this happens when past tenders data reach the market; the closest tenders are Turkish. The situation on the market of coasters will largely depend on how grain Exporters will build their work: either through shipments from deep-water ports of the Black Sea or from the ports of the Azov region.
Experts note that now there are mostly traded niche positions: pulp, seeds, sfs meal, peas, bran, safflower. At the end of February, parcels of these goods are ready for shipment. For now, however, Owners show no interest in fixing their vessels for this cargo on such distant dates; they concentrate on fixing their spot positions. Market activity is expected to increase nearer the end of February, when there will be cargoes with delivery dates for March.
Navigation on the Volga-Don canal opens in April. Against the background of minimum rates in the Azov region, it is expected that the Russian-flagged fleet will eagerly look for either transit general cargo or cargo from the river to the Caspian Sea. Such voyages already are in great demand, and transit rates will expectedly decrease with the approach of the navigation period. This can be useful for Charterers who did not have time to take out their cargo during the previous navigation; they will now have the possibility to fix the vessel much cheaper.
Probably, this year we will observe year-round availability of the Volgograd port. With the approach of spring, it’s is becoming clear that weather conditions will not prevent its work. Owners review the possibility to take cargo from there, but still they try to include an extra pay for entering the river. Exporters also increase the number of requests for shipment of grain from Volgograd and Tatyanka. Unlike the Astrakhan region, these terminals do not require paying for overload on vehicles and extra costs for the delivery of goods. It is noted that Owners are keen to sign contracts for several consecutive voyages at an agreed rate, so as they may be on a safe side in case market’s fall.
However, the Caspian market continues its decline due to lack of cargo. There still remains a problem of the delivery of grain to Astrakhan, with a steady demand for it from Iranian importers’ side. Amid the background of changes in wheat prices in other regions, Receivers would definitely like to review the delivery terms; though, by the time new contracts are signed, the issue of cargo availability at the port of Astrakhan should be closed. Traders are counting on transportation by rail from the Northern regions. It is expected that at the end of February, the first wagons with grain will arrive; this may improve the situation on the freight market and stop its decline.
Freight market in the Azov region continued to go through difficult times during the 5th week. Extremely low trading activity created unfavorable conditions for removing vessels from the spot. At the beginning of the week, there was a lot of open tonnage; this fact leaned hard on freight rates, which sank by about USD 2 for spot positions during the reporting week. Discussed rates were at the level of USD 16 per ton of wheat on the basis of the voyage from Rostov to Marmara. Owners reckoned that the situation would not change much in the near future, and many of them tried to fix fleet in spot, holding prompt vessels out of market.
By the end of the week, major Charterers started to offer cargoes from the Azov ports, which were quickly fixed. Charterers tried to knock the rate down even more, but Owners bucked against it: current rates already are at the level of the voyage profitability, and it is easier for fleet to idle than to work. Next week, the tonnage supply will increase further due to vessels returning from long-distance voyages; this will additionally worsen the situation in the region. Due to the uncertainty on the commodity market, which will last at least until March, some shippers reckon that it is better to accumulate cargo volumes at river ports, as they see no reason to transport cargo to the Azov Sea ports due to unclear sail prospects.
Rumors are quickly circulating among Exporters that the quarantine services may soon stop issuing certificates for products intended for export to China, and thereby shipments to the quarantine zone will be suspended. This may have a positive impact on the coaster market, seeing as Exporters will have to reorient their products to open markets; this will increase cargo offer in the region.
The situation with shipments from Black Sea ports is similar. The high market in December was followed by a sharp drop in the number of shipments, and freight rates fell. There are no long-term contracts; vessels are mostly fixed in spot on the verge of profitability. Still Owners hope that the strengthening of the US dollar against the ruble will aid of the new contracts conclusion, despite weak demand from buyers’ side, and freight rates will start to grow again; at least their reduction potential has long been exhausted.
The freight market in the Caspian region continued its decline amid low variability in the choice of possible voyages. Shipments from Astrakhan are still complicated by the problem with cargo delivery to the port, seeing as vehicles are actually blocked at the entrances to the city due to overload, and the first rail cars with grain have not reached the terminal yet. Port Aktau remains congested; at Makhachkala port, shipments are performed in a very low rate. According to market insiders, the port remains highly corrupt, and many major players prefer not to work from there.
A wide response on the Caspian market was caused by the news that “Russian Railways” will provide discounts on railway tariffs for transporting grain up to 400 km starting from March 1. This will allow Exporters, focused on Astrakhan, to resolve the issue of cargo delivery to the port, which will eventually help to stabilize the falling Caspian market.
Freight rates in the Azov region continued their decline on the 4th week. The reason for that is extremely low activity on the grain market. Turkish Traders bought all the necessary amount of grain under current contracts at the end of last year out of concern that that freight rates may go up due to severe frosts and worsening weather conditions in the Azov region. As a result, demand on Buyers’ part is currently weak.
According to experts, there is expected no significant market growth in the first days of February, as far as producers and Shippers have not yet settled the price with Buyers. Sellers prefer to give their cargo to major Traders for shipments from deep-water ports in large parcels. However, major Charterers offer a rate of USD 2-3 lower, which is behind the cost price for many Owners of river-sea type vessels.
There continues accumulation of spot vessels in the Azov Sea and at the Kerch roads, which is caused by the lack of cargo, as well as by stormy winds that blew in the second half of the reporting week. Major players of the Azov market suspended transshipments on roads, which led to a decrease in freight rates.
The rush for shipping of seeds to Varna and Marmara has also decreased. Aside from the significantly increased price of sunflower, Buyers decided to suspend shipments amid the background of a large offer from sellers, to bring prices into balanced state.
The deplorable situation with cargo offer from the Azov ports forces Owners to look for alternative loading options. They favor long-distance voyages from the Black Sea ports, where the river-sea type fleet currently competes with deep-draft sea vessels. Non-grain cargoes such as coal, pig iron and scrap are also in demand, as well as backhaul cargo, which almost graded up at rates to direct voyages from the Azov region. The abundance of coasters is likely to reduce freight level in the Black Sea as well.
In the Caspian region, rates from Astrakhan to Iran continue to fall due to problems with cargo delivery by road to the port of Astrakhan. At the end of the 4th week, Owners were ready to offer vessels at the level of USD 30 per ton or lower, which is close to the rates from Makhachkala, where Charterers fixed vessels at the level of USD 24 on the reporting week. Aside from small cargo offer, this is also explained by congestion at the roads of the Aktau and Makhachkala ports. Owners lose up to a week in wait for loading at these ports, which negatively affects the voyage economy and forces Owners to look for cargo from Astrakhan, where shippers have started to drive up prices, considering the current situation.
Market insiders agree that the Makhachkala port is not yet ready to completely replace Astrakhan as the main grain hub in the Caspian Sea, because its infrastructure was not able to provide for an increased cargo flow. Charterers will continue trying to use railway transport to a greater extent, and they will gradually return to Astrakhan, but this will not happen until the 6th or even 7th week.
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.
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.
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.
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.
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.
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.