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Unclear when stuck container ship Ever Given to move out of Suez Canal: owner

Highlights

Power shovel works begin to move Ever Given from shallows of canal

Suez Canal is one of the world's most critical commodity chokepoints

Tokyo — Japan's Shoei Kisen Kaisha, owner of the Ever Given, said March 25 it is currently considering what needs to be done to improve the situation of its container vessel, which ran aground in the Suez Canal on March 23.

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According to a company official, works such as the use of a power shovel to try to move the Ever Given, which was chartered by Taiwan's Evergreen Marine Corp., from the shallows of the Suez Canal started on March 24.

Evergreen is under a time charter agreement with the crew hired by the shipowner. The ship is currently deployed on a Far East-Europe service route.

It remains unclear when Shoei Kisen, which is based in Imabari, Ehime prefecture, will be able to see it move from the shallows and out of the Suez Canal completely.

Unclear when stuck container ship Ever Given to move out of Suez Canal: owner

Photo: Platts cFlow

The comments from the shipowner come at a time when market participants are waiting for this blockade to be over as it has disrupted the global trade for all commodities.

The shipowner's comments assume significance because they bring an end to earlier speculation that the ship has refloated and normalcy has returned.

Evergreen has urged the shipowner to investigate the cause of this accident, and work closely with Suez Canal Authority and related agencies to refloat the stranded ship as soon as possible, the company said in a statement on its website March 25.

The Suez Canal is one of the world's most critical commodity chokepoints, connecting the Red Sea with the Mediterranean. It is one of the world's busiest waterways and even the slightest delay in traffic can result in congestion and disturb the delivery of goods and commodities on both sides of the canal.

Related factbox: Suez Canal blockage sends ripples through global commodity markets

Suez Canal: A chokepoint for global energy flows | Ever Given

Ever Given

The Ever Given ran aground at about 0740 hours local time (0840 GMT) on March 23 after it suffered a blackout, while transiting in a northerly direction. The stranded vessel has a capacity of 20,000 twenty-foot equivalent units and is sailing under the Panama flag. The ship continues to remain anchored at the southern end of the Suez Canal, according to cFlow, Platts trade-flow software.

The Ever Given -- which can carry 20,000 containers of twenty-foot equivalent units, or TEU -- was the fifth ship in the northbound convoy.

More than 80 ships, both laden and empty, including energy products tankers, chemical tankers, dry bulk carriers and containers, are waiting to transit the canal from both sides.

Market impact of Suez Canal blockage

Trade for crude oil, refined products and LNG could be hit if the blockage at Suez Canal persists.

Based on S&P Global Platts Analytics ship-tracking, it looks like there are at least five LNG vessels that are immediately impacted by the closure, with the potential for maybe two more LNG carriers that could be impacted if it continues to be closed for the next few days, said Jeff Moore, Manager, Asian LNG Analytics at Platts.

"The inability for Qatari vessels to transit the route to get to Europe has the potential to put upward pressure on European hub [natural gas] prices, which could further support JKM, although I wouldn't expect it to have a material impact on the spread unless the canal is shut for a longer period," Moore added.

Of the five LNG vessels affected, three are destined for Asia and two are destined for Europe (namely Rovigo and South Hook), according to data provider Kpler, which said in a March 24 report that a total of 15 LNG vessels' planned transit via the Suez Canal will be affected.

"Out of the 10 LNG vessels waiting to transit Suez Canal South-Bound by the end of this week (28-Mar), six ballast vessels belongs to Qatargas," Kpler said, adding that there's potential for considerable delays in the loading schedule at Ras Laffan in the start of April if the congestion persists.

For crude oil, there were seven laden vessels waiting near the canal entrance, carrying 6.3 million barrels of oil, of which two were northbound and five were heading south for Asia, Kpler said. It said by the end of this week, two more crude tankers with 2.5 million barrels of oil will join the line.

There were also 15 refined product tankers with delayed ETAs for Suez Canal transit, of which 10 were north bound and five south bound for Asia and Red Sea; and two VLGCs, Clipper Sun and Gas Alkhaleej, laden with Nederland [US] cargoes were caught in mid-crossing while heading south, Kpler said. VLGC crossings averaged 21 (both ballast and laden) so far this year.

"With towing expected to be completed within a 24-hour period, Platts Analytics contends that the infrastructure constraint will be short-lived and the queue of around 100 vessels will likely clear within five days," Platts Analytics said in its latest update on the Suez Canal situation.

"Thus, while there may be little implication for oil, LNG and other commodity markets, any extreme delay to the towage could lead to a spike in freight rates, impair refining margins and add inject further volatility into global gas prices," Platts Analytics said.

It said total southbound crude and refined product traffic is generally around 1 million b/d higher than northbound traffic, for which there is considerable diesel flowing from the Middle East to the Atlantic basin, and as current stock levels are sufficiently high, the arbitrage for incremental barrels is closed.