Baltimore bridge collapse forces freight changes
Vessel traffic in and out of the Port of Baltimore, Maryland, has been suspended indefinitely in the wake of a container ship collision early today that brought down the Francis Scott Key Bridge, an accident that will force the rerouting of coal, car and light truck shipments.
The prolonged closure of one of the largest ports on the US east coast could have a ripple effect on trade flows across much of the US, as shippers grapple for alternatives in the absence of a certain reopening timeline.
Search and rescue efforts are still ongoing in the Patapsco River, after the 116,851dwt Dali headed to Colombo, Sri Lanka, slammed into a bridge support. The crew had lost control of the vessel. The Dali is owned by Grace Ocean and managed by Synergy Marine Group.
The Maryland Port Administration said it does not know how long it will take for the shipping channel to be cleared and for traffic to resume. Shipping companies are bracing for a closure of at least two weeks, but many expect the clean-up effort could take significantly longer.
President Joe Biden vowed the federal government will provide whatever resources are needed to get the port "up and running again as soon as possible."
The port is a major trade hub for steam and coking coal, automobiles and scrap metal. Many market sources are still trying to determine whether the disruption will be dramatic enough to move prices.
But coal markets were already being affected today.
Baltimore is home to two key coal export terminals: eastern US railroad CSX's Curtis Bay Coal Piers and coal producer Consol Energy's Consol Marine Terminal. The facilities are upstream of the bridge, meaning ships will not be able to serve them until the route reopens.
The terminals handle thermal and coking coal from Northern and Central Appalachia. They have a combined export capacity of 34mn short tons (30.8mn metric tonnes). The two terminals loaded 2.4mn t of coal in February, up from 2.1mn t a year earlier, according to analytics firm Kpler, mostly exports to India and China.
An India-based trader said that the suspension of coal exports will probably raise prices in India, as brick kilns enter the peak production season in the summer. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value.
Prices for deliveries to northern Europe are also likely to rise given that the Netherlands, Germany and Belgium combined are the second-largest market for North Appalachian coal. April API 2 futures rose by $2/t to $113.30/t. The incident has added a "level of volatility [which] could have big implications," a European paper broker said.
The lack of information has prompted some coal producers to hold off on activating force majeure clauses in their contracts.
Curtis Bay is served only by CSX, while CSX and fellow eastern carrier Norfolk Southern serve Consol.
CSX said it is in contact with existing coal customers and contingency plans are being implemented. The railroad at this point intends to keep Curtis Bay open but will continue to assess the circumstances moving forward. Norfolk Southern did not respond to questions.
Some scheduled Baltimore coal exports may be redirected to the other three eastern US coal export terminals in Hampton Roads, Virginia, but such reroutings likely will entail increased costs.
Not all coal mines will be able to shift terminals. Such decisions will depend on available capacity in Hampton Roads. Exports from the three terminals in January reached a five-year high, signaling somewhat limited capacity.
Mine location and railroad access may also determine whether coal can be rerouted, an industry source said. But some producers do not have much of a choice about trying to send coal to Hampton Roads. They may need the cash so will be forced into a decision.
The producers most vulnerable to delays may be Consol and Arch Resources. Arch's Leer coking coal mine may be in the best position because it co-owns Dominion Terminal Associates in Hampton Roads with Alpha Metallurgical Coal Resources.
The sudden lack of export capacity could put a floor under US coal prices, which have mostly been falling since last year amid low domestic demand. The competition to replace Baltimore coal exports could prevent further cuts, another coal trading source said.
Metals sources say the accident will have only isolated effects on the global ferrous scrap market, but many market participants are still assessing the situation. The port is the 10th largest ferrous scrap export port in the US, and over the last five years an average of 44,000 metric tonnes/month of ferrous scrap was exported from Baltimore, according to US Department of Commerce data.
But the port closure is likely to affect other freight. Baltimore is the nation's top handler of automobile traffic.
Motor vehicles and parts accounted for about 42pc of all Baltimore port imports and 27pc of all exports, according to state data. The Port of Baltimore handled 847,158 cars and light trucks in 2023.
"It's too early to say what impact this incident will have on the auto business — but there will certainly be a disruption," said John Bozzella, chief executive of industry trade group Alliance for Automotive Innovation.
Dry bulk freight rates likely unaffected
Several sources told Argus Baltimore's closure is unlikely to have a major impact on dry freight rates despite short-term interruptions to coal transports.
"We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures means the collapse "may not have too much of an impact" on freight markets overall.
Vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions from Baltimore.
Kpler identified 17 vessels that will likely be impacted because they are either in the Port of Baltimore or were expected to load there in the coming days.
![](https://argus-public-assets.s3.amazonaws.com/2024/03/26/portofbaltimorecoalterminals26032024075802.jpg)
Related news posts
Canaries' bio-marine fuel demand hit by ETS exemptions
Canaries' bio-marine fuel demand hit by ETS exemptions
London, 28 June (Argus) — Spanish energy firm Cepsa has delayed plans to supply marine biodiesel blends in the Canary Islands as increased demand for conventional bunker fuels and EU regulatory exemptions weigh on market fundamentals for the blended products. Cepsa's international marine fuels sales manager, Francisco Diaz Castro, told attendees at the Maritime Week Las Palmas conference last week that the firm remains committed to supplying marine biodiesel in the Canary Islands but is delaying it in response to a sharp rise in conventional bunker fuel demand in recent months, underpinned by vessels re-routing around the southern tip of Africa to avoid the risk of Houthi attacks in in the Red Sea. Vessels have been stocking up on bunker fuels before and after sailing around Africa's Cape of Good Hope to avoid stopping along the way. Latest data from the Spanish transport ministry show sales of conventional bunker fuel out of the Canary Islands last month increased by 3pc compared with April and by 41pc on the may last year (see table) . This demand growth has pushed suppliers to retain barge availability for conventional bunker fuels, reducing capacity to supply marine biodiesel blends. Market participants told Argus that another reason marine biodiesel demand in the Canary Islands has not picked up is EU regulatory exemptions for vessels sailing between the islands and mainland Spain. According to article 12 (3b) of the EU's Emissions Trading System (ETS) directive, "an obligation to surrender allowances shall not arise in respect of emissions released until 31 December 2030 from voyages between a port located in an outermost region of a member state and a port located in the same member state, including voyages between ports within an outermost region and voyages between ports in the outermost regions of the same member state, and from the activities, within a port, of such ships in relation to such voyages." Argus understands that this exemption applies to all vessels covered under the scope of the EU ETS, but would not apply if the vessel is sailing from an outermost region, such as the Canary Islands, to a different EU member nation, for example the Netherlands. A similar exemption for FuelEU Maritime regulations may be applicable as well, subject to member states asking for the exemption of the specific ports and routes for the vessels. Such an exemption could apply until 2029. Argus understands that requests from member states for this exemption will be published in the coming months. An exemption from FuelEU Maritime regulations could also be applied to routes connecting islands with a population under 200,000 people. This specific exemption would therefore not apply to Tenerife and Gran Canaria but may apply to other parts of the Canary Islands with smaller populations. By Hussein Al-Khalisy and Dafydd ab Iago Canary Islands liquid bunker sales t Month Las Palmas Tenerife Total Sales % m-o-m % y-o-y May-24 282,447 49,749 332,196 3 41 Apr-24 255,262 68,782 324,044 27 38 Mar-24 189,868 64,654 254,522 0 3 Feb-24 207,564 47,344 254,908 -6 0 Jan-24 219,962 51,894 271,856 16 27 Dec-23 187,889 47,306 235,195 4 1 Nov-23 181,218 45,940 227,158 5 -2 Spanish Transport Ministry Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Libya’s oil minister asks PM to clarify who's in charge
Libya’s oil minister asks PM to clarify who's in charge
London, 28 June (Argus) — Libya's sidelined oil minister Mohamed Oun has called on Tripoli-based prime minister Abdelhamid Dbeibeh to clarify who is in charge of the ministry. The question of who runs the oil ministry has been unclear since Oun returned to work on 28 May after a temporary suspension was lifted by a state watchdog. During his absence, Oun was replaced by oil ministry undersecretary Khalifa Rajab Abdulsadek, who represented Libya at the latest Opec+ meeting on 2 June. Dbeibeh has continued to recognise Abdulsadek as oil minister since Oun's return to work. In a lengthy statement defending his record, Oun complained that Dbeibeh has cut off all communication with him and that it is impossible to carry out his duties under such conditions. "The presence of a legitimate minister and an illegal minister" is creating confusion in the sector, Oun added. Dbiebeh was seen as a key player behind the initial removal of Oun. Argus understands that Oun's suspension was part of an attempt to clear the way for state-owned NOC to move ahead with key oil and gas projects the he opposed. But the move received pushback from powerful figures including the head of Libya's presidential council and the country's central bank governor, leading to Oun's suspension being lifted. "I don't expect this issue to be resolved any time soon. Dbiebeh is unlikely to want to get into a fight given his weakening position over the past few weeks," Jalel Harchaoui, a Libya specialist at the UK's Royal United Services Institute, told Argus . Although the position of oil minister in Libya has been largely relegated to a nominal role — and much less powerful than the chairman of NOC — Oun has successfully used his role to galvanise public opinion against deals and policies promoted by the government and NOC. Libya remains politically fragmented, with rival governments based in the east and west of the country, and control of Libya's oil sector is coveted by a wide array of factions tussling for power. The north African country produces just above 1.2mn b/d of crude and wants to boost this to around 2mn b/d, but this will only be possible if it can advance long-stalled projects. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Strikes disrupt bitumen at France Port Jerome refinery
Strikes disrupt bitumen at France Port Jerome refinery
London, 28 June (Argus) — Bitumen truck flows from ExxonMobil's 236,000 b/d Port Jerome refinery in northern France have been disrupted since 19 June by strike action at the neighbouring Gravenchon petrochemicals plant, according to market participants. Protesters outside the refinery entrance have blocked trucks, with the strike action linked to the petrochemical plant that is threatened with closure. Bitumen traders said they had been informed by ExxonMobil that a meeting will be held on 2 July between the company and its workers, and that the strike action is unlikely to stop before then. There has been less of an effect on cargo flows from Port Jerome. Four bitumen cargoes have loaded for export since the refinery's restart in May after an early March fire. The latest shipments have been to Bristol, southwest England, on the 6,165dwt An Hai Wan that arrived there on 25 June and to Galway, Ireland, on the 6,384dwt Bithav due in on 30 June. Port Jerome accounts for around 20pc of France's refining capacity and produces in excess of 600,000 t/yr of bitumen. ExxonMobil has yet to comment on the latest developments at Port Jerome/Gravenchon. By Fenella Rhodes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK HRC market ponders early closure of Tata BFs
UK HRC market ponders early closure of Tata BFs
London, 28 June (Argus) — The UK hot-rolled coil (HRC) market was pondering the potential premature closure of Tata Steel's blast furnaces today. Tata Steel UK could close both its furnaces and the wider heavy end at its Port Talbot site by 5 July because of the impending and "indefinite" strike by members of the trade union Unite, due to start on 8 July, company chief executive Rajesh Nair said in a note to employees on Thursday. Tata had initially planned to maintain blast furnace 4 until September, with blast furnace 5 going down this month. The strike, involving 1,500 workers, would mean Tata could not "maintain safe and stable operations", Nair said. Tata is trying to bring Unite back to the negotiating table, alongside other unions Community and GMB. The company said it will pursue legal action to challenge the validity of Unite's strike ballot — it has questioned whether the union met the 50pc participation threshold requirements at certain sites. Sources were caught somewhat off-guard by the news, which is complicated by the failure of the UK government to approve the Trade Remedies Authority's recommendation to suspend import quotas for HRC . With HRC import quotas still in place, supply from ‘other countries' sellers will be increasingly constrained — the duty-free quota is around 23,000/t quarter, but almost 50,000t could clear into this in 1 July, partially because of Tata's increased importation of Indian HRC. Should Tata's furnaces go off line early next month, it would need to increase imports of overseas tonnage, including from its parent company in India. Sources suggest HRC supply from its parent company could be booked for end-August arrival at the earliest. If quotas have not been suspended, there could again be duties payable for other countries' sellers. In a typical market, the disruption would clearly propel prices higher. But demand remains low, with mill tied and independent service centres competing to sell sheet as low as £620/ddp, a price which leaves no margin, based on average stock cost. Europe's imposition of a 15pc cap on countries selling into its own other countries quota is another complicating factor. That move effectively caps any country selling into that quota to 141,849t/quarter and could lead to material being diverted to the UK. The UK has not amended developing nation status as part of its latest safeguard review, meaning Vietnam — a major seller into the EU other countries' quota — can sell into the UK without quota. Vietnam is bearing the brunt of increased Chinese HRC exports, taking 3.9mn t over the first five months of this year, compared to 6.1mn t over the whole of 2023, which was a record high. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more