Key Europe ports hit by congestion, lack of storage

27 March 2008 13:35  [Source: ICIS news]

LONDON (ICIS news)--Northwest Europe's Amsterdam, Rotterdam and Antwerp (ARA) ports are congested and tank storage is at a premium as sellers retain product in an attempt to maximise profits or minimise losses, buyers, sellers and analysts said on Thursday.

 

“The barge congestion in ARA is affecting everyone - one of our customers was number 26 in line to discharge,” a transatlantic ship owner said.

 

He added that port rotation was slowing down because the barges were effectively being used as floating inventory.

 

"It’s creating a huge backlog because we depend on many of those barges," the owner said.

 

PJK international analyst Pieter Kulsen said the problem was due to backwardation and volatility primarily in the gasoline and motor gasoline (mogas) markets.

 

Backwardation means futures prices are lower in the distant delivery months than in the near delivery months.

 

“The enormous volatility in prices makes it difficult to nominate a right day to buy,” Kulsen said.

 

Buyers are only purchasing what they need, he said, adding that this had resulted in sellers holding on to product in the hope of reducing losses or optimising profits, he said.

 

Although the barges were charged for products not being offloaded, it was often better to pay the fines when compared with fluctuating prices, he said.

 

A Port of Rotterdam spokesman agreed the congestion problems were not caused by infrastructure issues but by speculation in the commodities market, leading to products being retained.

 

While backwardation is affecting mainly gasoline and mogas, congestion and storage problems were being felt further afield.

 

A methyl methacrylate (MMA) market source said he had he tried to get storage in the ARA region and found it impossible to rent a tank. There was a huge shortage of iso-tanks, he added.

 

A gas-oil trader said the port was more congested than usual was but barges were still being loaded and discharged.

 

Congesting and storage had been a problem for a long time and he couldn’t foresee any changes, said Kulsen.

 

But the problems were not impacting all sectors of the petrochemical industry, with olefins among those largely unaffected.

 

Julia Meehan, Shelley Kerr, Nel Weddle, Kawai Wong, Peter Salisbury, Mike Nash and Linda Naylor contributed to this story

 

By: Lucy Craymer
+44 20 8652 3214

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