As mainland Europe continues to bake in a summer heatwave and drought, chemical logistics problems are worsening along the river Rhine, while low water levels on the Danube and other water courses have forced widespread shutdowns of nuclear power facilities.

A long period of dry weather in Europe has reduced flows of water into the Rhine, with levels falling to record lows and cargo loadings dropping to below 20% of normal capacity in some areas.

Water levels at Kaub, one of the shallowest parts of the river, have fallen to a record of only 19 centimetres (cm) on 5 August, and are forecast to fall to 18cm by 9 August.

The long-term average depth at this point is around 200cm. The lowest level recorded since the start of the millennium had been on 22 October 2018, when averages hit 25.28cm.

Disruption to river transport has affected chemical plants along the river, which are struggling to load and unload raw materials and finished products, leading to a string of force majeures.

With no end in sight to the drought, and August usually being one of the hottest and driest months of the year, the situation is likely to get worse.

Reducing barge loads and switching to alternative types of transport adds delays, raises logistics costs and reduces capacity.

The impact of these low water levels is likely to be amplified by September, if demand and operating rates rise at the end of the summer lull.

FORCE MAJEURES AND LOGISTICS HEADACHES
On 5 August BASF declared force majeure on supply of several surfactants from its European sites, according to a customer letter seen by ICIS.

Disruption to the delivery of raw materials due to logistics constraints led by low Rhine water levels was the cause behind the declaration on 29 July. The company did not respond to a request for comment.

On 31 July, multiple market participants reported that Lanxess had declared force majeure on phthalic anhydride (PA) production at its Uerdingen facility in Germany.
According to market sources, it is linked to low levels on the Rhine, which have affected the movement of orthoxylene (OX) feedstock barges supplying the site. This was not confirmed by the company.

On 23 July ICIS reported that low water levels on the Rhine had disrupted logistics from LyondellBasell’s site in Wesseling, Germany. A force majeure on butadiene (BD) was declared, according to market sources, but this has not been confirmed.

The sources added that allocations were expected from August.

BASF declared force majeure on diisononyl phthalate (DINP) and dipropyl heptyl phthalate (DPHP) at Ludwigshafen, Germany on 16 July, citing production disruptions from extreme hot and dry weather, as well as significant logistics constraints caused by low Rhine water levels, according to a customer letter seen by ICIS. The company declined to comment.

In European BD markets, critically low water levels on the Rhine have added to supply-side pressures amid logistical and production constraints.

With rail capacity limited and barge economics deteriorating, producers face higher logistics costs and reduced supply chain flexibility, with implications for ethylene, propylene, BD and related derivatives.

In European isopropanol (IPA) markets, low Rhine water levels are severely limiting barge loadings and putting additional pressure on alternative truck and rail logistics.

However weak demand is contributing to lengthy conditions by putting little pressure on European stocks.

Last week BASF CEO Markus Kamieth said there could be product shortages or more force majeures by the company as it relies on the river for transport.

The CEO described how chemical sites and clusters are often in very complex Verbund structures and value chains. Sometimes, if only one raw material is missing it can have ripple effects, putting a lot of stress on production systems.

METHANOL HEADACHES
A buyer of methanol in Europe told ICIS that they have enough inventory to last two to three weeks longer but will then face problems as inventories are run down.

It said: “Barges cannot deliver at the moment – we already switched to truck delivery at the moment, so it’s a mess because we were not prepared for truck delivery.”

With barges operating at only 200-300 tonnes rather than the usual 1,000 tonnes, some Rotterdam terminals have increased their opening hours to help customers during August.

A fatty acids buyer told ICIS the low water levels mean that containers are sitting in ports and cannot be transported. It added that the rail system in Germany is also at low capacity due to maintenance works.

Road transport also faces challenges as the holiday season means there are fewer drivers available.

European polyol producers are facing issues from low Rhine water levels, with some highlighting that material could not be unloaded at a production site. Supply of some special polyol grades is being impacted, market sources said.

DROUGHT, HEAT IMPACT ON POWER GENERATION
Energy companies across Europe are on high alert as persistent drought, above-average temperatures and widespread wildfires threaten to curb nuclear and hydropower generation, while boosting gas demand during tight market conditions.

Data compiled by ICIS show that around 7 gigawatts (GW) of nuclear capacity was offline in France, Hungary and Romania in late July – equivalent to approximately 10% of the EU’s total installed nuclear capacity – due to exceptionally low river levels and persistent heat.

Source: ICIS By Will Beacham