BASF halts Ludwigshafen TDI production on Rhine woes

Tom Brown

26-Nov-2018

LONDON (ICIS)–BASF has halted production of toluene di-isocyanate (TDI) at its Ludwigshafen, Germany, verbund complex due difficulties transporting raw materials down the River Rhine, the company said on Monday.

Water levels on the Rhine have reached an “all-time low”, the company said, after months of transportation difficulties along the key chemicals logistics artery.

Despite the adoption of alternative transportation methods including pipeline, truck and rail freight, not all raw materials can be supplied to the complex at present, meaning that TDI production has been halted.

Restart of production is contingent on improvements in Rhine water levels, BASF added.

The company had already adjusted production levels at the flagship 300,000 tonne/year unit earlier this month.

“At the current water level, Ludwigshafen can only be reached by a few ships. Even after shifting quantities to alternative means of transport such as trucks and rail, the supply of some important raw materials will still be restricted,” a company spokesperson said at the time.

The company had attempted to surmount lower water levels by sending more boats carrying less product to and from Ludwigshafen along the Rhine.

A hot and dry summer, and low rainfall levels through the autumn, have made logistics difficult throughout northwestern Europe, swelling demand and inflating prices for shipping, rail and truck transportation.

Freight rates for time chartered 5,000-tonne barges in the area have risen to €12,000 in recent weeks, according to market sources.

As of 13:00 GMT, water levels at Kaub, a key gauging point on the River, stood at 30cm.

The production halt and ongoing logistics headaches are of sufficient magnitude that the impact could be felt in BASF’s financial results for the year, with potential for problems to drag on through early 2019, according to analysts at Germany’s investment bank Baader Bank.

“As BASF’s two Ludwigshafen crackers are running at 60% capacity utilisation, and are therefore by definition loss making, 13 production lines are halted and the logistic costs should have jumped in H218 [second half of 2018]. We expect that BASF might have to cut its FY [full year] 2018 guidance,” said Baader’s analyst Markus Mayer.

“In addition, we fear that if the water level remains at the current historic lows the Rhine might freeze in the winter for the first time, and consequently the low Rhine water level would also impact H119.”

Pictured: People walk over stones looking out of the River Rhine to the Maeuseturm (mice tower) of Bingen, Germany, which usually sits on an island. Archive image taken at the end of October.
Source: Michael Probst/AP/REX/Shutterstock

(Update, adds current water levels, production background, commentary from paragraph 5)

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