UpdateFlood impact on chems limited despite shipping disruption

05 June 2013 18:45  [Source: ICIS news]

(updates with comment on distribution networks in paragraphs 16-20)

LONDON (ICIS)--The flood waters flowing across Europe are not expected to have a significant impact on the production and distribution of chemicals in Europe, several producers and consumers said on Wednesday.

Heavy rain has closed shipping traffic along crucial transportation waterways across Europe, and near-historic water levels in parts of the Czech Republic has led to several companies – including Poland-headquartered synthetic rubber producer Synthos – to temporarily shut down production at several sites in the country.

Czech Republic-based companies Spolchemie and Spolana have also closed sites, while Unipetrol has reduced ammonia production at its Litvinov site in the country as a result of the flooding.

However, the bulk of these shutdowns are not expected to last more than a couple of days, meaning that they are unlikely to have a significant impact on supply. Water levels in several key locations along the Rhine and the Danube have also started to fall or are past their predicted peak water levels, meaning that most shipping routes are likely to stabilise over the next few days.

An acetone buyer said: “[The flooding has had] no serious impact on our production. It is a challenge for the supply chain to keep up the momentum, and [we] were able to manage this, [although] shipping is not possible until tomorrow. We found other opportunities. Acetone feedstock was not impacted.”

Crude oil product barge traders told ICIS on Monday that no major impact was expected on prices or the market as a whole, as slow demand and strong supplies in Europe will limit the impact of disruptions from the flood, which are expected to be relatively short-lived.

However, rescue operations and flood conditions prevail in numerous locations across western and central Europe, with flood waters rising on Tuesday night along the stretch of the Elbe passing Dresden. Sections of the Vltava river, Czech Republic, are expected to reach peak water levels today.

There are also understood to be rail disruptions in Germany’s Bavaria region, which may have implications for freight.

Meanwhile, Hungary is bracing for the floods to spread down through the country in the future, with the waters expected to reach the capital of Budapest by 9 June, according to the European Commission.

Waters remain high along stretches of the Middle Rhine, running between Bingen and Bonn, Germany, but the worst has passed, according to an official with agency Wasser- und Schifffahrtsamt Magdeburg.

He said: “Along the Middle Rhine, peak water levels were reached yesterday. Water levels at the gauging stations Mainz, Bingen and Kaub are not yet dropping significantly but remain on a high level.

“This is partly due to the fact that a polder [tract of land reclaimed from water and protected by dikes]  was set in operation yesterday in order to cut peak water levels and thus limit damages in villages and cities along the Middle Rhine. We expect shipping to reopen Friday/Saturday,” he added.

Shipping was also closed along significant portions of the Upper Rhine – running between Basel, Switzerland, and Bingen, Germany - earlier in the week, but the section of the river between Koblenz and Bonn reopened on Tuesday, and remaining sections are expected to reopen over the next day or two.

The whole of the Rhine through Germany is expected to be accessible for shipping by the end of the week, according to Gernot Pauli, an engineer for the Central Commission for Navigation on the Rhine (CCNR)

“The water levels on the Upper and the Middle Rhine are now more or less stable or are even going down. The estimates suggest that sometime on Friday or early Saturday the shipping may resume on all stretches where currently shipping has stopped," he said.

A source with knowledge of Germany's petrochemical distribution network said that the Rhine is the country's key artery for the transport of chemicals, and as that it slowly returning to normal, a major disruption to distribution is unlikely.

"On the river systems that are most affected, the Danube and the Elbe, there is very little chemical traffic. The key one is the Rhine, which is used all the way up to Basel for chemical and fuel transport," the source said.

“[There are] spot disruptions of road and rail, which [can be likened to] when you have a mountain pass closed or a tunnel closed in winter. It is something that takes a day or two to adjust, but after that it will be re-routed, and it shouldn’t be a problem,” the source added.

What disruption there is will be more likely to apply to road and rail transport, as flood waters leave certain bridges and roads impassable. The roads around Passau, southwest Germany, are likely to be a key bottleneck, as the intensity of flooding will take several days to die down.

"In that area, on the A3 motorway to Passau, the disruptions are serious, and will take a day or two [to be resolved]. But there are ways to get around that," the source said.

A spokesperson for German chemicals giant BASF reported flooding at parts of the company’s Ludwigshafen site near the Rhine on Monday, but the situation is improving, she said on Wednesday.

“The climax was on Monday, and has been decreasing since then. There is still a part [of the site] that is flooded, but I think the worst is over,” she said.

Water levels for the Danube are also continuing to drop near Netherlands-based DSM’s site in Linz, Austria, according to a spokesperson for the company. Austria-based Borealis said on Monday that melamine production and deliveries from its Linz site are also unlikely to be impacted by flooding on the Danube.

Players in the European aromatics market, meanwhile, also said on Wednesday that flooding along the rivers Rhine and Danube has yet to have any significant impact.

The German government announced €100m ($132m) in disaster relief on Wednesday, noting that water levels are continuing to rise in the Saxony and Saxony-Anhalt regions of the country, and that levels are high but beginning to fall in Bavaria in the southeast and Thuringia, in the centre of the country.

($1 = €0.76)

Additional reporting by Julia Meehan

By: Tom Brown
+44 208 652 3214

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