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Shallow water drives ARA coal stocks to 1-year high

11 Jan 2017, 1.36 pm GMT

Shallow water drives ARA coal stocks to 1-year high

London, 9 January (Argus) — Dry weather in northwest Europe continues to prevent fully loaded barge shipments by river to German coal-fired plants, resulting in mounting coal stockpiles at dry bulk terminals.

Low water levels on the key Rhine waterway since September have forced barge operators to impose surcharges to compensate for reduced cargoes.

Constraints on river shipments, amid steady imports from Colombia, Russia and the US, pushed combined coal stocks at the four main Amsterdam-Rotterdam-Antwerp (ARA) terminals to a 12-month high of 4.87mn t today.

Inventories gained 370,000t on a week earlier, their fifth consecutive rise. Stockpiles have now climbed by 29pc or 1.1mn t since their last week-on-week fall in the week ending 2 December.

Draft restrictions in the Rhine-Ruhr region have sharply lifted freight rates, because large barges capable of carrying 3,000t must lighten loads by up to two-thirds, a Rotterdam-based operator said. Inland freight prices on the route are now €8-9/t ($8.4-9.5/t) compared with €2-3/t in regular conditions, causing utilities to postpone shipments with the anticipation water levels recover.

"It is a disaster," the barge operator said. "Since September, we have had an increase in water level for only 2-3 weeks in November. From then until now it has been extremely low."

Levels at the Rhine's key measuring point of Kaub, in western Germany, were as low as 52cm today — well below the 180cm threshold for undisrupted navigation — but could recover slightly to 80cm by 13 January, according to information service Elwis. Rainfall in nearby Frankfurt should surpass 2.5cm/d on 10-13 January, before retreating to below 0.5cm/d for the next fortnight, according to Speedwell Weather forecasts.

Two German coal-fired power generators are already reporting supply disruptions.

RWE informed the European Electricity Exchange (EEX) on 16 December that low water was affecting deliveries to its coal plants in North Rhine West-Phalia region. The 608MW Gersteinwerk, 717MW Bergkamen, and 765MW Westfalen plants remain affected "until further notice", RWE said.

The utility followed EnBW, which first disclosed to EEX the possibility of fuel shortages at its 1,260MW Karlsruhe, 788MW Heilbronn and 336MW Altbach plants in Baden Wurttemberg on 13 December. But utilities are increasingly choosing railways over barges to carry coal to secure fuel supplies, according to a large port operator.

One-fifth of the 20mn t offtake at region's largest terminal, Rotterdam's EMO, went via rail in 2015, with 55pc by barge. OBA in Amsterdam sent 25pc of its 10mn t coal offtake the same year by rail, and 40-50pc via barge.

German coal-fired generation strengthened in November-December compared with a year earlier, amid weaker wind output, and despite less favourable dark spreads relative to spark spreads. Coal burn in the last two months of 2016 averaged 10.18 TWh/month against 8.36 TWh/month in November-December 2015, data from researcher Fraunhofer ISE show. Gas-fired generation gained to 4.53 TWh/month from 3.55 TWh/month in the same period.

Dropping temperatures in industrial hub Cologne may spur increased thermal power generation next week, with minimum temperatures touching -8°C on 17 January, down from -1°C today.

ARA ports expect robust thermal coal arrivals throughout most of January, providing a further boost to stockpiles if low rainfall persists. EMO is scheduled to unload Russian and US vessels of a combined 172,400 deadweight tonnes (dwt) this week, in addition to an Australian 169,100 dwt Capesize carrying coking coal.

EMO inventories climbed by 200,000t last week to 2.2mn t — including 400,000t of coking coal. The terminal unloaded vessels of a combined 4.12mn dwt in December.

OBA in Amsterdam, which does not disclose shipping line-ups, reported a busy programme this week and next. Its stocks climbed by 100,000t on the week to 2.05mn t today.

The smaller Ovet and EBS facilities in Vlissingen and Rotterdam posted weekly gains of 40,000t and 30,000t, respectively. Ovet now has coal stocks of 480,000t, with EBS inventories at 140,000t.

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