Short-sea market fundamentals in brief // week 40

The small-tonnage shipping market witnesses a steady uptrend in freights, which has even accelerated in early October compared with last week thanks to rate increases not only in the Azov-Black Sea basin but also in the Mediterranean and Baltic Sea ports. In particular, the Azov Sea CFI has surged by $6.3/t and the BlSea CFI by $1.21/t. Being totally stagnant last week, the Med CFI has inched up by $0.33/t and the Lower Baltic & Continent CFI by $0.26/t. As a result, the Global CFI has rocketed by $1.28/t.

Another rapid surge in bunker prices after a short break has become quite an unpleasant surprise for shipowners this week, as the market seemed to have stabilized in late September after a four-week continuous rise.

As for the commodity markets, the first week of October is standing out for a significant splash in quotes of almost all major commodities, particularly grains, fertilizers, and metallurgical products. As a result, the Global ISM Commodity Index for a coaster market has jumped up by almost 4 points.

Anxiety mounts on the grain market amid unfavorable weather conditions in major agricultural countries and growing geopolitical tensions. Therefore, worsening outlook for the future production keeps roiling the global market and boosting the prices. In particular, quotes for Ukrainian corn, wheat and barley are falling rapidly due to dim production assessments and disrupted oversea shipments. Prices for EU-origin wheat and barley have hit the two-month high amid concerns about the future production. Moreover, strong expectations of poorer yields and, as a result, lower grain exports from Russia are driving up prices for the EU and Ukrainian origins.

Indian tenders for the procurement of large volumes of urea continue heating the overall fertilizer market. This week has finished with quite a marked splash in urea prices, spreading throughout the nitrogen segment further to the sector of phosphorous fertilizers. In fact, the most significant price hikes have been seen in the segments of Russian and Egyptian urea, Russian UAN and DAP as well as Moroccan DAP.

The metallurgical market has showed unexpectedly rapid increases in prices for semi-finished and finished steel products. Russian and Iranian exporters of square billets are confidently raising prices following the overall excitement; moreover, they see rather steady interest from Turkish importers. Quotes for Russian HRC have surged amid the overall uptrend on the metallurgical market. Rebar export market is dead. Deliveries to Lebanon stopped due to the war, while Turkish producers chiefly focus on the domestic sales.

The coal market is the only one which looks pretty mixed contrary to the overall uptrend in prices for the other commodities under review. Quotes for imported thermal coal keep rising in Western Europe amid continuing problems with gas supply and the approaching season of active consumption. In Turkey, coal prices are flat; importers’ demand is quite high, which supports prices. South African coal market is quite brisk, which supports the growth of export prices for high-calorie coal, although Indian consumers are interested mainly in medium and low-calorie coal.