Europe petchems logistics suffer added pressure from Rhine low water levels

LONDON (ICIS)–Lower water levels on the River Rhine are putting pressure on European petrochemicals supply chains, adding to the disruption caused by the coronavirus pandemic.

Costs for transport of petrochemicals increases when the Rhine’s levels are low because barges cannot fully load, and companies have to pay for more barges for the same amount of product.; the route is the largest waterway for transport of goods in Germany.

Water levels have declined by around 100cm at the Kaub measuring point to 115cm as of Monday morning.

“We see really low water levels for this time of year. This is caused by two factors, the first is that no rain in the whole catchment area since about six weeks; the second is that low amounts of snow in the Alps during winter,” said Florian Krekel, spokesman at the Rhine Shipping Authority (WSA).

The river acts as a key route for receiving key feedstocks and delivering end products for many petrochemical producers situated close by, including industrial heartlands in Germany and the logistics hubs of the Netherlands.

“Barges have to travel partially loaded because the fairway in the middle-rhine valley offers not more than 220cm at the moment,” added Krekel.

As the coronavirus has spread across Europe, countries have issued lockdowns to prevent the further contagion.

Increased travel restrictions have impacted supply chains for all industries continuing to operate at this time, including the chemicals sector.

Trucks have largely been permitted to continue travelling throughout Europe despite travel bans.

Demand for freight drivers is strong for what authorities have deemed “essential industries”, and any vendors looking for alternatives to transport material may struggle to find an available solution.

The weaker demand felt in many markets downstream of the petrochemical sector (such as the automotive industry) has led to a slowdown in production, inadvertently relieving some pressure on shipping.

In line with this, the response from chemicals markets is differing, depending on the markets they are associated.

“What we see is that the stocks are increasing slightly, not dramatically. There are also some cancellation of loading of barges. Some ships were redirected to other destinations too,” said one shipping contact on methanol, as demand has eased in this market.

“There have been no issues yet with Rhine. Water is staying at a level where you can’t load barges fully but that’s it and this has led to no impact,” said one butanediol (BDO) producer which has also recorded a downturn in demand.

Rhine levels have fluctuated greatly in recent years, waters became so shallow  in 2019 that several producers previously had to announce a force majeure because they could not supply and receive material.

To adapt to this, some producers have designed new barges that can cope with the lower water levels.

A butadiene (BD) source said: “For the moment, the Rhine is manageable. It definitely helps that the new builds of barges, can transport more volumes than in previous years, but if it continues will become another problem.”

“Rhine is one to watch, no rain forecast…and already close to critical levels, in the first instance this means reduced volumes but could mean – especially in southern regions some – Rhine closures,” said one propylene player.

“It’s a concern and we are keeping a close eye on the situation, but we are expecting rain,” said another source from the propylene market.

A downpour could provide enough water to keep river levels buoyant, and dampen any fears about increased problems on already-strained supply chains.

Front page picture: ICIS map, industrial facilities in the Rhine

Focus article by Morgan Condon

Additional reporting by Eashani Chavda, Clare Pennington and Nel Weddle