LONDON (ICIS)--Numerous European chemicals players have expressed concern about key shipping artery the River Rhine, with official data on Friday projecting that water levels are likely to continue to fall in days to come.
Water levels are understood to be below the minimum levels for full loading along sections of the river but at present are not a serious issue, sources said.
However, players are concerned about the impact of a prolonged warm, dry period could be on levels already significantly below average for the time of year.
“[Levels are] not an issue right now but… [are] far below where it is normally at this time of year,” said a buyer. “With hot weather recently and to come, it will be difficult,” it added.
“What is scary is [that] with the Rhine at the level it is now, [we] could see a very dry July and August – we are glad to have some RTCs [rail tank cars],” said a consumer that takes some feedstock via barge.
“We are already not loading maximum [loads] on barges – we are already allocating on barges,” it added.
Water levels along the busy section past Kaub, Germany, stood at 152cm as of 12:30 London time on Friday, below the 170cm floor for full loading of freight vessels, and is expected to fall another 10cm over the next four days, according to Germany’s waterway and shipping administration.
Source: Wasserstraßen- und Schifffahrtsverwaltung des Bundes While this remains significantly above the levels of around 70cm recorded in January, when Rhine barges were loading at 25-40% of total capacity, chemicals market sources are concerned over how far that figure will drop in coming months.
An analyst at Germany’s Federal Institute of Hydrology (BfG) noted that some rain is expected in the region through the rest of June, but that July is expected to be comparatively dry, which could potentially exacerbate the lack of substantial surface and groundwater replenishment in recent years.
“Rhine levels start to worry us. There is no problem up to now but they keep dropping while no rainfall is expected in the coming days,” said a distributor.
The German gasoil and diesel market is also monitoring Rhine levels despite a recent replenishment of stocks following a sharp sell-off in upstream ICE Brent crude oil and gasoil futures contracts, leaving inventories full enough to meet end-user requirements.
The same is true for Switzerland where the land-locked country has built up enough mid-distillates stocks.
However, traders in both countries are keeping an eye on the Rhine because freight rates are rising rapidly as the lower water levels prevent barges carrying refined oil products from sailing fully loaded.
In an otherwise quiet jet kerosene market, the Rhine has become a focus of uncertainty.
A risk management and supply officer for jet fuel at a major airline said: “[There is concern] as we have had issues the last couple of years.”
Additional reporting by Cuckoo James, Vasiliki Parapouli, Nel Weddle and Nigel Davis