Low Rhine levels bring challenges for petrochemical market

New York — Low water levels on the River Rhine have been causing challenges for petrochemical producers and consumers, sources told S&P Global Platts this week.

Water levels dipped to as low as 100 cm at the key chokepoint of Kaub on June 4, before recovering slightly to 106 cm as of June 5 as rain swept across western Europe.

"Gas barges are underloaded by at least 25%, liquid barges are underloaded to a higher extent," a consumer located on the upper Rhine said.

Weakness in many European petrochemical markets as a result of the coronavirus pandemic has meant that any impact has not been as severe as during normal times, sources said.

"Volumes are low anyway so nobody is complaining if the barge is half-full. There has been little impact," one butadiene market source said.

Usually, declining water levels can lead to an increase in demand for trucks as barges cannot fully load. However, a methanol distributor said that, unlike last year, low water levels were not creating any challenges for the truck business as spot liquidity was thin.

Sources noted that rain is expected over much of the coming week, bringing some expected relief to water levels, with the WSV projecting water levels at Kaub will recover to 134 cm by June 9.

However, some recorded a note of caution stating that challenges were still likely through the remainder of 2020.

"This rain does not mean we are through this. If the water level is as low as this at the beginning of June it is a sign we may have some problems over the rest of the summer," a producer located on the mid-Rhine described.