Low Rhine water levels to impact ARA product carriers

Nov 30 2018

Low water levels on the Rhine have remained a persistent problem for the European commodity markets since the summer.

This has forced many refineries and industrial plants to reduce production, and in some cases to declare force majeure, Gibson Shipbrokers reported.


The impact of these low levels has had a knock-on effect down the Rhine to the Amsterdam-Rotterdam-Antwerp (ARA) trading hub and beyond.


Initially, ARA stocks rose in response. Product supplies backed up down the river, as shallow waters forced barges to reduce cargo loads.


Middle distillate stocks should be rising ahead of winter, particularly given the inability to get products up river, but have instead fallen by nearly 1 mill tonnes since October, Gibson said.


Lower stocks have been facilitated by reduced imports, re-exports and diversions away from the ARA hub in the wake of persistent logistical issues and a backwardated gasoil market.


Once the rains return and water levels start to rise, not due for this month, according to meteorologists, ARA buying activity will firm, perhaps substantially if stocks continue to fall over the coming weeks.


This resurgent demand would translate into firmer product tanker demand and should provide a short term boost to distillate flows from the US Gulf, Baltics and Middle East into the ARA, provided we don’t see too much competition from newbuilding crude tankers trading product into Europe from Asia, Gibson concluded.


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