Vessels travel at 25% capacity as Rhine water levels drop further

LONDON (ICIS)–Water levels on the Rhine continue to fall, leaving cargo vessels unable to carry more than a fraction of their total capacity, and no immediate relief expected for trade along the key chemicals shipping artery, according to the River’s water authority on Friday.

Cargo ships travelling along the Middle Rhine between Bingen and Bonn, Germany, are currently unable to carry more than 25-40% of their capacity, according to the Rhine Shipping Authority (WSV).

“If you have to transport 3,000 tonnes you can only carry 600-700 tonnes that means you have to pay a very high freight,” an oil products trader in Germany said.

Low water levels on the Rhine have hindered cargo shipping since late 2016, due to low rainfall. Water levels rose for the first time since December last week, but have been decreasing since 15 January, according to WSV spokesperson Florian Krekel.

Water levels at the Kaub gauging station stood at around 70cm on Thursday, and are expected to fall further in the days ahead.

“The current weather forecast does not point to any change. During the coming week no rain is expected. Water levels will keep on decreasing,” Krekel said.

Source: WSV

A petrochemicals seller reported that it currently has vessels leaving with 200 tonnes on board, down from 1,000 tonnes.

Another chemical industry source reported being able to transport 800 tonnes of product on barges at present, compared to 2,000-3,000 tonnes under normal conditions.

Straitened shipping conditions have driven a boom in truck transportation, it said, but a lack of sufficient drivers remains an issue in that industry, it added.

BASF is understood to be particularly dependent on Rhine transportation at present due to on-going repair work at a pipeline route at the producer’s Ludwigshafen, Germany, complex, following an explosion at the site in late 2016. According to a company source, production has not been impacted, but the low water levels could prove to be a concern if the situation continues for too much longer.

“We are still in crisis mode after the accident, bringing in naphtha by barges,” said a company source. [If there is no improvement] then will automatically have a production problem at Ludwigshafen. [The] pipeline is still in repair… so [we] depend more than any other on Rhine for transportation. [It] affects naphtha, affects other raw materials, affects downstream production which is shipped out by barges.” 

Despite lower loading capacity, the impact of low water levels has been relatively minimal in inland markets, the primary destination of most barges, according to another oil market source.

Demand for products such as gasoil – which is used primarily for heating – is low in inland markets in Germany.

The contango structure in the benchmark ICE gasoil futures has meant most market participants are high on stocks and have little need for additional tonnes.  End consumers in the key German market have an inventory of over 60% of storage capacity.

Additional reporting by Cuckoo James, Melissa Hurley and Nel Weddle

(update adds additional oil market commentary in paragraph 3, additional commentary on BASF in paragraphs 10-11 and oil market commentary in paragraphs 12-14)