Suez Canal reopening eases worries on Asian chemical shipment delays

SINGAPORE (ICIS)–The reopening of the Suez Canal has brought relief to some Asian chemical markets but worries still linger over current shipments and how long the backlog of vessels waiting to transit the key waterway will be cleared.

Vessels began entering the Suez Canal late on Monday after a containership that had blocked passage since 23 March was dislodged.

“The container ship that has been blocking the Suez Canal for the past six days has been freed and ships are starting to move again in one of the most important waterways of the world,” said Singapore-based UOB Global Economics & Markets Research.

Despite the resumption of vessel traffic at Suez, sources dealing with India-based buyers of synthetic rubber said that they remain cautious over near-term deliveries.

“While it is good that the blockage has cleared, it is still too early now to conclude all’s well for their upcoming shipment,” an India-based trader said, adding that things may be clearer “only in a week’s time.”

More than 400 ships were waiting to pass through the canal during the blockage and that it could take three or four days to clear the backlog.

Prior to the vessel being cleared, some ships had been re-directed to travel around the Cape of Good Hope, South Africa, which adds as many as 10 days to the voyage.

“I have regular glycerine shipments from Europe to Asia every month, and I was really worried that the Suez Canal will not be reopened for weeks,” a glycerine trader said.

“I am really relieved that the ships now can pass through the canal and my crude glycerine cargoes from Europe can now be delivered to my customers in China and India, with the delay limited to about one week,” the trader said.

The re-opening of the canal “immediately brings relief” but its impact remains muted for oleochemicals, a supplier based in Southeast Asia said.

“I feel no change except that the buyers will not push or order for inventory,” the supplier said.

Meanwhile, two shipments of vinyl acetate monomer (VAM) from Asia totaling 10,000 tonnes faced a two-week delay despite the opening of the Suez Canal, said one supplier.

The cargoes were originally due to arrive in Europe in the beginning of April.

Another VAM shipment from a separate Asian supplier originally bound to arrive in Europe in early to mid-April has been diverted via the Cape of Good Hope.

Several market players in Europe raised concerns over the potential congestion at European ports once the canal is open and the jam of ships start to flow towards Europe.

As of Tuesday afternoon, 163 vessels are awaiting for transit at Suez, 137 in Port Said and six in Great Bitter Lake, which is connected to the Mediterranean Sea and Red Sea via the Suez Canal, shipping agent Leth Agencies said in a post on Twitter.

Some 37 vessels from Great Bitter Lake has cleared the canal on Monday night, it said.

The Suez Canal is a crucial route for crude oil, chemicals and refined products travelling from the Middle East and Asia-Pacific to Europe and North America, with any disruption presenting a significant choke point to trade, at a time when shipping routes are already substantially disrupted.

Additional reporting by Lim Ai Teng, Adam Yanelli, Helen Yan and Helen Lee

Focus article by Nurluqman Suratman

Thumbnail photo: The Ever Given, a Panama-flagged cargo ship is pulled by tugboats, in the Suez Canal (Source: Suez Canal Authority Office/UPI/Shutterstock)

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