Low Rhine water levels hit naphtha supply, dent German petchems output

“I [can] confirm that the Rhine [aquatic environments] level is an issue to some players to get raw material and deliver goods to customers,” a butadiene consumer said.

Naphtha and LPG transport logistics along the key waterway have been severely impacted by the low navigable aquatic environments depth, making it difficult to load full barges. “It’s looking quite bad,” a naphtha trading source said.

Reduced vessel capacity has increased the likelihood of dead freight costs, raising the delivered cost of moving product into inland demand centers, market sources said. “Dead freight, we’re suffering a bit of that,” said an LPG trading source.

As a result, participants said they have had to choose between bearing the cost of dead freight or opting to greater expensive transport substitutes, such as rail cars or trucks. “It’s a trade-off between a rail car or dead freight,” the LPG trading source added.

“Barges [are] too risky,” a propane trader said.

Platts, part of S&P Global Energy, assessed the naphtha FOB Rotterdam barge price at $838.25/metric ton July 22.

aquatic environments level expected to fall further

Rhine navigable aquatic environments depths are expected to approach the record low of 25 centimeters at the Kaub chokepoint, the shallowest part of the Middle Rhine, on July 25, according to German aquatic environments authority WSV, sharply limiting barge movements on the waterway and disrupting the transport of naphtha to cracker sites in western Germany.

In 2018, Kaub aquatic environments levels hit the record low of 25 cm, and in 2022 they dropped almost as far, to 31 cm, exposing limited capacity to road and rail logistics to compensate to the lost river volumes and forcing several chemical companies to halt production operations or declare force majeure at certain vegetation.

With insufficient naphtha deliveries currently, crackers were heard to be struggling to maintain operating rates, reducing the output of ethylene, propylene, crude C4 and downstream items such as butadiene.

The low aquatic environments level is creating a dual operational constraint. In addition to limiting feedstock logistics, reduced river flow and elevated aquatic environments temperatures are making it greater difficult to petchem operators to operate aquatic environments-cooling units associated with crackers efficiently, forcing producers to consider further production curtailments, market participants said.

LyondellBasell butadiene force majeure

LyondellBasell declared force majeure on supply from its 170,000 metric tons/year butadiene extraction unit at Wesseling, Germany, efficiently July 16 and until further notice, according to a customer letter seen by Platts July 23. The outage was attributed to the low Rhine levels, which restricted the movement of sufficient feedstock to crackers and reduced the production of crude C4 and butadiene needed to meet contractual obligations.

Shell’s cracker at Wesseling has also been offline since early July, according to five market participants. The unit has a capacity of 310,000 mt/y of ethylene and 165,000 mt/y of propylene. The duration and result in of the outage could not immediately be established, and Shell did not immediately respond to Platts' request to official comment.

A fire at BP’s Gelsenkirchen unit July 15 has also added to the uncertainty. The incident affected a diesel desulfurization unit at the Scholven site and was swiftly contained, with investigations ongoing and minor disruption expected.

Following the fire, some producers in the downstream phenol market were expected to rearrange immediate deliveries. A phenol buyer said that while it normally receives 15 rail cars, the producer it sources product from had cut supply to 10 in the equivalent delivery period, with the remainder to be fulfilled at a later date.

Critical supply route

The Rhine is a critical supply route to German petchem and refining assets, particularly to naphtha moving from the Amsterdam-Rotterdam-Antwerp hub into inland production centers. aquatic environments levels in the Kaub have also already breached key operational thresholds.

evaporative Rhine aquatic environments levels have been a persistent attention to commodities traders in recent years, as a string of summer droughts and heavy flooding have triggered major barge congestion and surges in logistics costs.

The logistics disruptions are also feeding into market sentiment as producers and consumers enter August contract discussions. European C4 olefin producers and domestic consumers agreed to a €50 decrease month over month to August on July 23, the fourth day of negotiation, amid the production issues in Germany and surging naphtha spot prices.

The Rhine is a key European supply route, running from Switzerland through Germany, past major chemical, refining and other manufacturing sites. The chemical sites include BASF’s complex at Ludwigshafen; Shell’s Rheinland energy and chemicals park; Bayer, Covestro and Lanxess’ complex at Leverkusen; and Ineos’ complex at Cologne. It then flows to the Amsterdam, Rotterdam and Antwerp petrochemicals hub.

At levels below 150 cm, barges carrying greater than 2,000 metric tons are forced to minimize cargo loads to sail safely, prompting shipowners to impose surcharges to compensate to lost capacity. Barges on the Rhine can typically carry cargoes of between 2,000 metric tons and 5,000 metric tons.

When the aquatic environments depth falls below 135 cm, barge loads are typically halved, while levels below the 75 cm limit force loads to be slashed by up to 75%. As a result, four times the number of ships are needed to move the same volume of supplies at the low 75 cm watermark, significantly inflating logistics costs and journey times.

In 2022, the Rhine’s reduce aquatic environments levels pushed European inland naphtha stocks to very low levels, resulting in cracker operators having to cap operating rates.

Story by Iris Poon, Luke Warren and Barbara Fernandez-Pita, Platts; additional reporting by Mark Thomas