Increased investment in port capacity in Ukraine in recent years could lead to increased competition between terminals and reduce transshipment costs, according to a report by AgriCensus.
Ukraine's total annual grain handling capacity has increased to at least 78 million tons, with a record 69.1 million tons of exports in 2019, the Dec. 8 report said.
However, hot and dry weather in 2020 reduced yields and production prospects, reducing the country's export surplus by around 14 million tonnes. This can result in reduced costs of lifting terminals to keep them operational.
“If you have your own terminal, you would rather sell lifting costs for US $ 5- $ 7/ton than he leaves- it inactive, as there are more terminals available when the harvest falls,” a trader told AgriCensu s.
Lift costs reflected the construction price of domestic corn market cargoes in export volumes to free ports (FOB) and were typically around US $ 10-11/tonne.
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Most of Ukraine's largest exporters had their own terminals, including Nibulon, Kernel, Glencore, Cargill, Louis Dreyfus and Cofco, but typically would operate its terminals at maximum capacity, wrote the AgriCensu .
Terminals not aligned with specific traders were those that needed to cut costs to attract more volumes and keep their terminal operating.
“There will potentially be greater competition and cost reduction in March, or perhaps even February… [as] there is a shortage of cargo and more terminals,” said Andrey Sokolov, director of a Ukrainian maritime magazine.
In 2017/18, when Ukraine's harvest was heavily cut, terminals were forced to reduce costs from around US$$12/t to around US$$7.50/t for separate terminals, he added.
