There is a mixed situation on the small-tonnage shipping market of the Black and Mediterranean Seas in the second half of April. On the one hand, charterers continue to lower rates, taking advantage of long tonnage list amid rather modest cargo flow. The grain season is coming to an end in the Black Sea region, Ramadan starts in Muslim countries, while European countries still cannot resume operations at a full pace given ongoing COVID-19 epidemic. On the other hand, despite a decline in freight rates of $0.5-1.5/t this week, owners manage to preserve generally good levels of estimated TCE (sometimes even exceeding OPEX) thanks to another collapse in prices for MGO and VLSFO ($60-80/t down in 2 weeks). Still, the average owners’ earnings are lower compared to late April of 2019 and 2018, even without possible downtimes caused by quarantine measures. As for the current market levels, ISM experts suggest $17-18/t for shipment of 5-6,000 t of wheat from Niko/Kherson to EMed and $11-12 for transportation of 5-6,000 t of steel billets from Novo to the Marmara Sea.
The sentiment is gradually turning in charterers’ favor on the sea-river market of the Azov Sea as vessels are increasingly opening in the region. However, even if charterers manage to lower rates, the drop is so far very insignificant (mere $0.5-1/t down over the week), and owners again offset this decline using lower gas oil prices. According to ISM, transportation of 3,000 t of wheat or corn from Rostov/Azov to TBS/Marmara/Izmir now costs $18.5/t / $20.5/t / $23.5/t.
Things for coaster owners are getting worse in North Europe. The number of new cargo requests remains small, while charterers often do not even enter the market with offers. Therefore, the surplus of coaster fleet is only sharpening in the basin. Amid high competition, owners have to make further concessions. Over the week, most rates have dropped by another €1-3/t on average, depending on the route. Thus, freights for shipment of 5-6,000 t of fertilizers from Vyborg to Ireland amount to €21-22/t bss 1/1 at the moment.
The possibility of any improvements in trade in South Europe is small so far. Owners put hopes only on a further increase in shipments of steel products from Spain and Italy, as well as on the recovery of steel exports from Turkey, Ukraine and Russia. Demand for square billets, coils and rebar has strengthened somewhat in MENA countries ahead of Ramadan; therefore, relevant shipments should provide support to the market in the next 2-3 weeks. At the same time, grain exports will most likely continue to slow down in May, even despite the return of Romanian suppliers after a short-term export ban. The sentiment of North European market participants is still rather pessimistic. Even in case of a gradual return of major European players, the cargo offer will hardly grow noticeably.
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