10 November 2011 14:33 [Source: ICIS news]
LONDON (ICIS)--The Rhine’s low water levels are putting further pressure on the already-tight European caustic soda market, sources said on Thursday.
Some companies said they are experiencing logistical problems trying to transport product along the Rhine, which is a major European shipping route for chemicals and other commodities, including minerals, coal and oil products.
According to Germany’s Federal Institute of Hydrology, water levels have decreased steadily since the middle of October in most areas of the country to unusually low levels for this time of year.
The low levels have limited shipping space as well as the quantities barges are allowed to take. According to a chemical producer, barges can take only two-thirds of their usual load, restricting supply and causing upward pressure on freight costs.
The effect on the caustic soda market is particularly strong because it was already tight, with little product available for spot business.
Plummeting consumption levels in the polyvinyl chloride (PVC) market have led to a significant reduction in the output of feedstock chlorine, decreasing the supply of caustic soda, a co-product of chlorine, and sending spot prices soaring to levels not seen since 2009.
The annual market trend points to further tightening as demand for PVC tends to slow in December and January, in line with a fall in activity in the downstream infrastructure and construction sectors.
Several caustic soda suppliers and buyers are located in the Rhine region and use the river to move product. Road transportation is not an alternative for large quantities, while there is limited availability from other net exporting countries such as Libya and Egypt, a producer said.
In Mannheim, water levels have dropped by around 60%, down from more than 360cm in mid-October to around 150cm on Thursday, the institute said.
In Cologne, water levels have decreased to below 130cm from above 300cm in mid-October. In Dusseldorf they are around 90cm, down from around 260cm. The lowest levels, around 60 cm, are in the Emmerich area, near the border of Germany and the Netherlands, it said.
Dry weather is expected to continue, with no rain for at least another week, according to forecasters.
($1 = €0.74)
For more on caustic soda visit ICIS chemical intelligence
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