Catastrophic flooding in Germany, Belgium and the Netherlands over the last week has caused transport and production disruption in the Rhine valley, a major shipping route for commodities in Northern Europe.
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The Rhine and Meuse rivers are key waterways used for the transport of fuel, oil, metals and agricultural commodities across the EU's most industrialized regions.
The flooding -- which has so far claimed over 180 lives -- also coincides with German elections in September that could return a coalition with a stronger climate and energy transition mandate.
The following impacts to markets have been reported by the news team at S&P Global Platts.
Metals industries in the region have taken the brunt of the impact due to rising water levels.
- Germany's Thyssenkrupp Steel declared force majeure to customers on July 16, saying it was unable to deliver pre-material between its sites with steel deliveries to customers also disrupted because of damage to the rail network. Barges for raw material shipments on the Rhine were less affected, it said.
- Hagen-based steel cold-roller Bilstein has also declared force majeure, saying it could only receive raw material in limited quantities "for the foreseeable future" due to the damaged rail network. Dutch steel mills, meanwhile, reported flooding on the Meuse in Belgium had disrupted barges.
- "Dryer conditions should result in rapidly declining water levels," said S&P Global Platts Analytics late last week.
Disruption was also seen in oil, petrochemicals and fuel barges.
- European petrochemical sources said there was additional pressure on tight truck availability in the Amsterdam-Rotterdam-Antwerp region, with the potential of truck costs rising sharply.
- Middle distillates were the most exposed to disruptions to transport on the Rhine. The floods had yet to have much effect on price or supply, however, as inventories at ports were high on the back of poor demand.
Impact on spot prices were muted with markets adjusting to seasonal variations in demand.
- Platts hot rolled coil assessment stood at Eur1,170/mt EXW Ruhr July 19, steady after rapid price rises due to material tightness seen earlier in the year led to all-time highs of Eur1,190/mt in June.
- In oil products, FOB ARA low sulfur diesel barges fell $1.25/mt on the week to a $2/mt discount to the August ICE LSGO futures contract, as already low demand for barges from the Northwest European hub was stumped by disruption on the Rhine.
- The closure of the Rhine did not have a notable impact on the inland markets of Switzerland and Germany as there was plenty in storage in tanks, sources said.
Power markets saw more activity in response to the flooding and damage to infrastructure.
- German and French day-ahead power prices surged back over Eur91.00/MWh for delivery July 20, in part responding to strong political statements on climate change action following the floods.
- The price of CIF ARA coal into Europe was also up as record gas prices incentivized coal burn in Germany.
Flooding devastated large areas of western Germany along with Belgium, causing billions of dollars of damage but power infrastructure has been restored quickly.
- Operations at RWE's Inden lignite mine were suspended for around a week, forcing the 1.3 GW Weisweiler lignite plant offline.
- While power was restored to several hundred thousand meter points by July 19, damage to distribution and high voltage substations could take weeks or months to repair in hard-hit communities west of the Rhine around the Ahr and the Moselle, and around the Meuse in Liege, E.ON Westnetz in Germany and Elia in Belgium said.
- High river levels reduced the risk of cooling water restrictions this summer at inland coal and nuclear plants in northwest Europe, while increasing the likelihood of above-normal run-or-river hydro generation. Even ahead of the floods, Rhine river levels were boosted by snowmelt to 155% of long-term averages.