LONDON (ICIS)--The ongoing blockage of the Suez Canal after a container ship ran aground looks set to further tighten already-stretched chemicals value chains, while likely delivery delays continue to spiral with each hour the vessel remains aground.
Efforts to dislodge the 400m long container ship the Ever Given have been largely unsuccessful so far, with marine services firm GAC saying on Wednesday that the vessel had been refloated, citing feedback from the Suez Canal Authority, but remaining wedged lengthwise across the shipping lane.
The substantial disruption to a key trade route is likely to intensify tightness for beleaguered chemicals markets such as polyolefins, which have already seen supplies shorten and prices spike on the back of production outages and the continuing fallout from the US Gulf Coast polar storms.
“The Suez situation is adding fuel to the fire,” said a polyethylene converter.
Not all markets are likely to be affected, with just a single ammonia tanker passing along the route every six weeks, but the situation could stand to exacerbate straitened commodity chemicals value chains.
The Suez Canal is a crucial route for crude oil, chemicals and refined products travelling from the Middle East and Asia Pacific to Europe and North America, with any disruption presenting a significant choke point to trade, at a time when shipping routes are already substantially disrupted.
The Suez Canal Authority on Thursday formally suspended navigation through the crucial shipping artery.
Thirteen vessels have been given permission to proceed from Port Said, north of the blockage, on expectations that the Ever Given may have been freed from the sandbank by the time they arrive at the 151km mark where it is currently beached.
Contingency plans have been drafted for those vessels to dock at the Bitter Lake waiting area if the blockage remains in place at the time of their arrival, indicating that the authority does not rule out a protracted rescue process.
Netherlands-based dredging specialist Boskalis has been tapped to assist in the work, which has centred up to this point on attempts to remove sand from the point where the Ever Given is beached while tug boats attempt to dislodge it.
Weighing around 200,000 tonnes, the vessel could potentially remain aground for weeks, Boskalis CEO Peter Berdowsi told media on Thursday, potentially necessitating the removal of containers from the vessel to lighten the load, a lengthy process in the absence of port infrastructure.
Tides are currently rising 10cm a day, according to a broker source, which could help to dislodge the ship, but it is likely to take days for the water levels to rise sufficiently where this could be a solution.
Chemicals deliveries from Asia and the Middle East to Europe and North America would have been delayed by several days even if efforts to dislodge the Ever Given had proven successful on Wednesday.
If the vessel remains in place through to the weekend, those delays could stretch to 10 days, and worsen the longer it remains in place, according to a source.
“The high tide is increasing by 10cm a day, so the hope is that they will not have to offload the cargoes aboard and instead wait for water levels to increase, [but] this could take a number of days, potentially up to Sunday,” it said.
Players could look toward re-routing shipments via the Cape of Good Hope in South Africa, but this would substantially increase delivery times. That puts players in the position of having to choose between the additional cost of delaying shipments until the Suez Canal is clear or sending product along a more circuitous route.
A shipping source estimated that sending a shipment from Al-Jubail, Saudi Arabia, to Rotterdam, Netherlands, would be nearly double the distance and take 36 days instead of 20, at an average cruising speed of 13 knots per hour.
Focus article by Tom Brown.
Additional reporting by Linda Naylor, Marta Fern and Richard Ewing. Infographic by Yashas Mudumbai.
Thumbnail picture:: A digger works to free the grounder Ever Given. Source: Suez Canal Authority.