Giant container ship still blocking Suez Canal

The 400m long container ship Ever Given, which ran aground in the Suez Canal yesterday, is still blocking the critical waterway, a source at the Suez Canal Authority (SCA) told Argus.

Bernard Schulte Shipmanagement (BSM), the firm managing the container ship, said efforts to refloat the giant vessel are ongoing. BSM said that the status of the ship was unchanged since it ran aground on a northbound passage at 07:40 local time (05:40 GMT) yesterday, although local shipping agent GAC reported earlier that the vessel had been partially refloated and moved alongside the canal bank.

Shipping agent Clarksons told Argus that a dredger vessel had been dispatched to the area to free the container ship. Clarksons said 43 vessels that had been transiting the canal southbound as part of the 23-24 March convoys will have to wait in Bitter Lake until the blockage has been cleared. A further 21 vessels, which were set to be part of the 24 March convoy, will wait at the Port Said outer anchorage at the north end of the canal, and 42 vessels are waiting at the southern outer anchorage, having planned to transit the canal northbound in the next two days, Clarksons said.

The Suez Canal is a critical chokepoint for oil and gas movements. Among the ships waiting at Port Said are five Suezmaxes carrying crude and two Suezmaxes carrying high-sulphur fuel oil (HSFO). There is also one Long Range 1 (LR1) tanker and one Long Range 2 (LR2) vessel carrying naphtha, and one Aframax with a fuel oil cargo. A Medium Range (MR) tanker carrying fuel oil also appears to be waiting at Bitter Lake, according to shipping data.

Crude exported through the canal is mostly shipped on 1mn bl Suezmaxes. Around 360,000 b/d of crude has been exported from the Black Sea to Asia-Pacific through the canal since March 2018, while 310,000 b/d was sent from the Mediterranean to Asia-Pacific during the same period. Around 855,000 b/d has travelled from the Mideast Gulf to the Mediterranean over the past three years.

Crude tanker freight rates have not been impacted by the closure of the Suez Canal so far. A few ships that were planning to ballast northbound through the canal could miss loading dates for Mediterranean or Black Sea cargoes if the waterway remains blocked. But vessel availability in the Mediterranean and Black Sea area is sufficient to allow charterers to find replacements. An extended closure could tighten vessel supply in the Mediterranean and Black Sea more significantly, potentially supporting freight rates. The canal is crucial to tanker availability in this area.

Clean tanker rates are also yet to be impacted by the Suez Canal closure. But potential delays caused by the blockage could lead to laden vessels being stranded in the Mediterranean and unable to carry their cargoes to Asia-Pacific, or disrupt vessels returning empty and force charterers to pay premiums to secure prompt replacements. Naphtha is the oil product most commonly freighted on clean tankers to east Asia through the Suez Canal. Volumes from Europe so far in March are on track to hit around 612,000t, carried mainly on LR1 and LR2 vessels. This is down from 1mn t/month in January and February. Japanese demand for naphtha is increasing, with several refinery crude distillation units in the country slow to restart after an earthquake in February. Several naphtha cargoes are scheduled to depart Europe in the next week.

Fuel oil is also frequently shipped through the canal, although east Asian demand from February and early-March has largely dissipated, and the Singapore 0.5pc sulphur marine fuel market recently flipped into a contango, with front-month swaps at a discount to forward values. But volumes are still travelling eastwards and could be hampered by any halt in Suez Canal traffic.

By Will Collins, John Ollett, Nikos Kokolinakis, Ruxandra Iordache