02 December 2011 16:18 [Source: ICIS news]
LONDON (ICIS)--Low water levels on the river Rhine in Germany are limiting transport and damaging demand in some European refined product barge markets, sources said on Friday.
While water levels are thought to have risen by 2–3cm since Wednesday, they are still depleted. The river’s height as of 12:45pm on 2 December was 50cm at Kaub.
The effects of the low water levels are being felt particularly in the German 50ppm gasoil barge market.
“Rhine levels are still low and causing problems,” a 50ppm trader said.
“Water levels are very low, vessels can’t go too far south,” a second trader added. “Everything is limited. There are nearly no buyers and barges can only carry around a third to a half of normal volumes. People are only buying what they really need.”
Transport difficulties have pushed freight rates upwards, with the second source adding that the rates have doubled since October.
This combination of high freight rates and subdued demand has exerted downwards pressure on 50ppm premiums. On Thursday afternoon, premiums over December ICE gasoil were at $6–8/tonne (€4–6/tonne), compared with $18–20/tonne a week earlier.
The ultra low sulphur diesel (ULSD) barge market has also felt the effects of the low Rhine water levels. However, greater market activity outside of Germany has left this market faring better than that for 50ppm.
“There’s quite a bit of ULSD trading in the ARA [Amsterdam-Rotterdam-Antwerp] region, away from the Rhine problems,” a ULSD and gasoil trader said.
A second trader added: “Nobody wants to take product into Germany with freight rates as they are.”
Rain is forecast in some parts of Germany this weekend. However, it is uncertain if the rainfall would raise water levels sufficiently to improve the situation.
“Some rain is expected which will ease the supply situation. How much water it will be will be known next week,” the first 50ppm trader added.
($1 = €0.74)
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