Petroleum coke supply from the US Gulf could tighten following a fire at a major Mississippi River terminal last week, if repairs at the plant extend well into the new year.
United Bulk Terminals (UBT) in Davant, Louisiana, remains under a force majeure declared on 22 November following a fire the previous day. The terminal recently told clients that it expects to have an estimated timeline for repair work by the end of this week, after an engineering team arrived on 27 November to inspect the damage. The third-party group is expected to provide a report on the status of the plant's truss structure by the end of the day on Thursday.
A number of market sources said the terminal was believed to be operating close to capacity before the fire and could load around 600,000 t/month and about 6mn t/yr of dry bulk commodities, mainly coke and coal. Coke has typically made up the majority of its shipments, but coal handling has been on the rise this year.
Petroleum coke prices have fallen rapidly in the past two weeks as a number of spot cargoes were offered simultaneously for December and January loading. At the same time, freight rates from the US Gulf jumped by around $10/t by 20 November from the beginning of the month, to their highest levels in more than a year. This pushed the spot fob US Gulf 6.5pc sulphur coke price to its largest week-on-week drop in over 15 months last week.
"Whatever inventory that is there now can't get out," one source said. "I think it's a big deal, but I can't quantify what it means for the market."
If the outage lasts only about a month, market participants have enough other options "that you're not really going to see that big of a disruption," another source said. "If this is a longer outage, maybe you start to see the impact."
The terminal does have a backup floating crane system that can load from barges to ships, but the loading rate is much slower than its typical system, a third source said. Some ships that were scheduled to load from customers' piles have been redirected either to other midstreaming loading operations or other terminals. Vessels are in short supply in the Gulf at the moment, so no customer wants to give up a ship, preferring to load a cargo elsewhere.
The situation is unusual in that terminal outages normally occur alongside major weather events like hurricanes, which also typically reduce petroleum coke production. "In this case, it's just like the hurricane hit the terminal," the first source said.
