New Egypt’s quarantine requirements provoked increase in vessel demurrage and freight rates growth

23.08.2016

According to international brokers, grain traders from the Black Sea region and Europe were discouraged by toughening of quarantine requirements for wheat imports to Egypt. As a reminder, at the beginning of the week Egypt introduced a rule which prohibits unloading of grain which could be polluted or damages, including ergot, before obtaining test results.

Market operators note that such an analysis and obtaining of appropriate certificate will take at least 10 days. As a result of the new rule the cost of imported wheat may increase for Egypt, as traders will include the cost of additional analysis and tonnage demurrage in anticipation of unloading into the price. Earlier USDA announced that this year Egypt would spend additional USD 100 mln due to extraordinary inspection policies and additional sampling system and other requirements of the procurement tenders.

This may result in lack of tonnage in the Black Sea region and increase in freight rates. Vessels demurrage period while shipping grain to Egypt has already increased. Information service "Promyshlennye gruzy" reported that queues in Egyptian ports (especially in Alexandria) when unloading grain increased, and the idle period was 7-10 days. According to brokers, in such circumstances freighters began asking for premium for grain transportation to Egypt. Owners of "river-sea" fleet asked USD 37-38/MT compared with USD 35-36/MT a week before for transportation of 3 KMT of wheat from the Azov / Rostov to Alexandria.

More information on freight market is available to subscribers for weekly market report "Black Sea Grain & Oil" by UkrAgroConsult.

 

 

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