Category: Insights

Insights from Lars – comparing ARA and Rhine freight rates over the summer.

Freight rates in both the ARA region as well as on the Rhine remained strong, supported by increasing demand and the ongoing low water levels, which are hampering intakes. Freight rates for Rhine based destinations have not only risen for Middle and Upper Rhine destinations, where loaded volumes are contracted by low water levels up pegel Kaub, but also destinations in the German Ruhr area are highely affected. The difference between ARA-routes like Cross Harbor transports, Antwerp – Amsterdam and Rhine based tranports to Duisburg or Cologne are shown below.

In common situations, freight rates per mton are increasing in line with the voyage durations. The strong demand, and therefore increasing rates, to German markets are seen in the two graphs. Besides the absolute freight rates, a graph is made for indexed freight rates. The base rates of 1st of May 2018 are used for this calculation. After a slow late-spring, with low freight rates per ton, rates started to increase from July on. This has been accelerated by decreasing water levels and increasing demand for automotive fuels in hinterland markets. Rates to the Ruhr area, which are longer voyages compared to ARA-transports and are therefore priced at higher levels, saw a steady increase during the summer season. In August, a distinction is seen between demand in ARA, which was fading, and up the Rhine, which was supported by diesel transports.

Last month, rates up the Rhine increased further. Water levels continued to stay low and the market regained support from outages at various refineries in Germany. The maintenance season is causing less local supply and an unplanned outage at the Vohburg refinery in Bavaria is limiting product supply even further. Importers are looking at alternative outlets and more product needs to be imported to handle domestic demand. This is partly done over the Rhine, where barges are still coping with loading restrictions. Imports by barge have however increased by over 60% during September compared to the summer months, as was seen in PJK’s Rhine barge flow reports. By comparison, rates to Lower Rhine destinations have more than quadrupled in the last months. The revenue per barge is somewhat lower due to less loaded volumes, but are still elevated. This is also seen in the ARA, where supply of barges is lacking due to the higher demand in Germany.   The demand for importing product in the coming weeks could remain high since end consumers still need to stock up heating oils for the winter. This has been postponed last spring due to the backwardated market structure, so stock levels in hinterland are relatively low. With inadequate local production, low availability of barges and high freight rates, keeping track of the markets is vital in order to stay up to date.

If you would like more information about our products like the Rhine flow service, barge freight rates and daily reports, contact our sales department in the Netherlands at +31 850 66 25 00 or at info@insights-global.com.

Quick insight ARA Tank Terminal capacity expansion

The ARA region is an important trading hub in Northwest Europe due to its infrastructure and fundamentals to serve the physical market for liquid trade. Location is key and ARA’s location is exceptional due to the Rhine river that connects with the Benelux countries, Switzerland, France and Germany. Also the ARA region provides refining facilities, tank storage and is seen as oil pricing center.

In the first image you can view the evolution of the tank terminal capacity in the greater ARA region. Important capacity additions in the past two years were done by Botlek Tank Terminals, Koole Tank Storage Minerals and NoordNatie Antwerp. At the same time we can observe various expansion activities in the ARA region, which will increase the current tank storage capacity further.

Secondly in the image below you can see the capacity under construction. Various players will also be adding capacity to their current storage capacity. The total amount of storage capacity under construction will be about 2.3% of current installed capacity and will be accessible in the coming years. Besides expansions , new terminals are expected to be built as well in various ports, focusing on liquid bulk like mineral oil products & petrochemicals.

We do expect some changes that might alter the ARA fuel oil market and petrochemical market and may therefor influence the tank storage market in those segments. Are you interested to get more information contact us at the headquarters in the Netherlands at +31 (0) 850 66 25 22.

Insights from our analysts

This weeks insight from Lars van Wageningen, our Operations Manager at Insights Global, also quoted by Bill Lehane (Bloomberg) considers the market is getting tight. The inland stockpiles haven’t been replenished over summer because Rhine barges haven’t been able to operate at full capacity. Furthermore even as the water levels start to recover, the Rhine barge rates remain high; also barge traffic has risen on the main river. In addition the Bayernoil Vohburg refinery outage is also adding to tightness, with suppliers in that region looking further north for supply than usual.

A quick Insight in the ARA petrochemical tank storage market.

In Northwest Europe the oil and the petrochemical sectors are leading sectors that employ thousands of people directly and indirectly within the region. The main European production cluster for liquid bulk products is made up of the Benelux countries, Switzerland and the German and French regions that are connected to the Rhine river.

The Amsterdam, Rotterdam, Antwerp region or ARA is the main trade hub that connects Europe to global markets. The petrochemical sector is responsible for producing various materials such as plastics, paints, solvents, fibres and raw materials for pharmaceutical and cosmetics sector. Taking a closer look at the petrochemical side of the cluster and the different market participants in it, many of the companies produce goods in high-volume or ‘bulk’ quantities.

Companies in this cluster have been getting more exposed to severe competitive pressure. This has been Leading to the closure of for example La Mede refinery, Reichstett refinery, Petit Couronne refinery and the Wilhemshafen refinery. Also the decision made by Gunvor to not go ahead with their investment in upgrading the GPR site is a sign of high uncertainty amongst players about what the future will bring. Despite this at the same time there are others planning expansion like Ineos, one of the leading chemical companies with sales of around 60 billion dollars and their production network spans 171 sites and 24 countries. Ineos announced that their plan will have 2.7 billion capital investment in Northern Europe.

One of the things to watch in the future and the question for all is; where will the new Ineos plant be built. According to news articles both Rotterdam and Antwerp are being considered. As Ineos already has production sites in Antwerp we give Antwerp a slightly bigger chance, but you never know what the outcome will be. Either way it is likely to boost trade in ARA, as Ethane and propane imports will increase and most likely chemicals and intermediates trade will also increase.