River Rhine levels normalising but persisting logistic woes to increase prices

LONDON (ICIS)–Water levels on the River Rhine are “normalising” and no further closures are expected beyond the 76km stretch still shut to shipping, the German federal waterways authority WSV told ICIS on Tuesday.

However, the knock-on effect on logistics in northwest Europe is set to persist for days, increasing costs for petrochemicals players seeking to move product.

On Monday, WSV said a stretch of the Rhine south of the key petrochemicals hubs around Cologne and Dusseldorf had been shut after water levels surpassed the legal maximum for shipping.

Several sources tell ICIS that German chemicals major BASF, which operates the Ludwigshafen petrochemicals hub, is having problems in the styrene chain, but the company would not comment in writing to ICIS.

A letter sent by Swiss chemicals logistics provider Bertschi to customers and seen by ICIS, however, painted a more pessimistic scenario. Logistical problems are set to persist until 23 July at least and the company has sharply increased its prices.

Chemicals equity analysts at Germany’s Baader Bank also said that, besides BASF, other majors located in the area are experiencing logistics disruption, including Covestro, LANXESS, and Evonik.

Heavy rain in Germany last week caused flooding in the southwest; the Rhine is a key waterway for petrochemicals, chemicals and oil products in northwest Europe.

Germany’s official death toll is nearing 200, but many remain unaccounted for and there are fears the final toll could be much higher.

LOGISTICS MAYHEM, HIGHER COSTS
Rhine levels may be normalising while Germany reels from the human and economic costs of the floods, but petrochemicals players will still experience trouble with logistics for most of the week, and costs are likely to increase.

While BASF’s written response to ICIS did not answer questions on its styrene chain, several sources this week have indicated that this was the case.

“Thanks to declining water levels, transport on the Rhine between the ARA ports and Ludwigshafen is again possible without restrictions. Transports by train can also be carried out again,” said the company.

“Production at the site Ludwigshafen is not affected at this time. We adapt our logistical measures quickly and flexibly to the respective situation.”

However, Bertschi’s letter to customers on Monday warned of disruption for a few days still and communicated a “general price surcharge” for all orders loading 19-23 July of €400/shipment.

“The situation remains extremely challenging with severe implications on all operations. Most lanes remain interrupted. Particularly the corridors Belgium/Netherlands/Germany-Ruhr towards south (Switzerland, Italy, Spain, France) and v.v. [vice versa] are heavily impacted.

“However, the entire European rail-network is currently being impacted. As a result thereof, terminals have stopped acceptance of units, forcing us to drop containers on our own terminals, handle/store them and shunt them back to the rail-terminal once possible.

“Please bear in mind that we face long waiting times for collection/delivery at concerned terminals.”

Analysts at Baader Bank said on Tuesday that logistical costs, which have already been high for months as the pandemic-induced mayhem continues, are likely to increase for petrochemicals players in Europe.

“The German flooding will in our view tighten the already very tight supply situation for certain chemical raw materials further,” said the bank in an investor note.

“Consequently, [this] will lead to additional product price increases which will delay the expected end of the re-stocking into Q4 2021.”

WATER LEVELS NORMALISING
A spokesperson for the WSV said that, while the closure implemented on Monday persists, water levels further down the Rhine are normalising, and no further closures are expected.

The WSV added that barge shipping between the key petrochemicals hubs of Mannheim in Germany – which includes operations for the aforementioned producers – and Amsterdam-Rotterdam-Antwerp (ARA), is currently unaffected.

“Yesterday’s [Monday] situation persists. The water levels at the gauges Speyer and Maxau are still exceeding the maximum shipping water levels,” said the WSV spokesperson.

“But as they are both situated further upstream/south of the Mannheim/Ludwigshafen area, traffic between ARA and Mannheim/Ludwigshafen is not affected. The rest of the Rhine is open to shipping. No water levels-related closure are in sight.”

River Rhine closures on Tuesday
–

–

Front page picture: German Chancellor Angela Merkel (R) meet volunteers helping with the relief effort after heavy flooding in Bad Muenstereifel Arloff, southwest of Bonn, on Tuesday.

Source: Sascha Steinbach/POOL/EPA-EFE/Shutterstock

Focus article by Jonathan Lopez

Additional reporting by Vicky Ellis, Fergus Jensen, and Miguel Rodriguez-Fernandez