Low water on US rivers disrupts coke shipments

  • : Petroleum coke
  • 22/10/11

Historically low water levels on the Mississippi river have slowed petroleum coke shipments by barge and may delay export shipments and calcined coke movements as carriers load less tonnage on barges and limit barge tow sizes to avoid groundings.

The lower Mississippi river, a key waterway to ship coke from refineries in the midcontinent as well as the Louisiana Gulf, was closed for multiple days over the past week as barge groundings blocked traffic and required dredging. This resulted in thousands of barges getting backed up near Memphis, Tennessee, and Stack Island, Mississippi, in what was "the largest closure ever recorded," according to major carrier American Commercial Barge Line. The closure lasted from 4-9 October. Then, on 10 October, the Ohio river was forced to close until early 11 October because of multiple barge groundings in the Mound City, Illinois, area, just north of where the Ohio meets the Mississippi near Cairo, Illinois. The upper Mississippi also had to close for dredging at Cape Girardeau, Missouri, between Cairo and St Louis, on the afternoon of 10 October and was expected to reopen 11 October.

Even with traffic resuming on these waterways, the low water levels will delay coke shipments. The US Coast Guard has limited vessel drafts to a maximum of 9.5ft and tow sizes to five barges along some stretches of the lower Mississippi river since late September in response to the lower water conditions. Drafts have been reduced to 9ft for the Ohio, Tennessee and Cumberland Rivers.

This has curbed the amount of petroleum coke that can be loaded on each barge. One coke buyer said its recent barges were loaded 300-400t lighter than typical, at about 1,600t. This increases the number of barges needed to transport the same volume of coke along the river, while also keeping spot barge rates elevated.

Argus spot rate assessments for northbound fertilizer barges from New Orleans to terminals between Old River, Arkansas, and Cairo, Illinois, rose to a record high of $32.25/short ton on 25 August and have held steady at this level since then. This is more than 25pc higher than their previous spike between August and September last year.

"Most of the petcoke business is booked on an annual basis so I don't expect an increase in the petcoke rates, but I do believe [the lower water levels] will slow down petcoke deliveries to New Orleans," a dry bulk carrier said.

But shippers' demurrage costs are also likely to increase as the low water leads to delays, such as last week's barge backup, and other longer term problems.

Hundreds of barges are waiting to have tonnage removed in order to be light enough to continue to move down the river. Labour shortages in the industry are also slowing down barges as there are fewer towboat crewmembers. And there is a shortage of barges themselves as the fleet was reduced after Hurricane Ida destroyed many vessels in late August last year. This tightness is increasing as the US is in its grain season.

"If the low water continues to persist, it's not unreasonable that some carriers may be forced to declare force majeure," the carrier said.

An average of 1.6mn st/yr of coke moved on the Ohio river system in 2016-2020, while an average of 2.3mn st/yr moved on the Mississippi river between Baton Rouge and New Orleans, Louisiana, during the same five-year period, according to the US Army Corps of Engineers.

Low water affects anode green and calcined coke

While the bulk of coke shipped downriver on the lower Mississippi river is fuel-grade coke, the anode-grade coke market could face shipping challenges as well.

Rain Calcining, Oxbow Carbon, and Alcoa each operate calcining units in the US Gulf and midcontinent and receive a significant portion of their anode-grade green petroleum coke (GPC) feedstock via barges, both from domestic and international refineries, as seaborne coke vessels are often unloaded into barges for further shipment to calciners.

The need for more barges and the potential for higher demurrage is likely to add to calciner's total GPC costs, a market participant said.

The low water on the Ohio river could affect calcined coke shipments upriver to smelters in this region as well.

"It could limit supply of calcined coke if the situation doesn't improve soon," one calciner said.


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24/05/21

Lower fuel costs lift Indian cement producers' margins

Lower fuel costs lift Indian cement producers' margins

Singapore, 21 May (Argus) — Lower prices of petroleum coke and thermal coal, the two key fuels used in producing cement, helped raise margins at Indian cement producers over January-March compared with a year earlier. India's largest cement producer Ultratech increased its January-March profit by more than 35pc from a year earlier to a record 22.58bn rupees ($271mn) because of subdued kiln fuel costs. The company's blended coke and coal fuel costs for the quarter fell to $150/t, down by 22.7pc from a year earlier. Ultratech's overall energy costs for cement during the quarter fell by 21pc from a year earlier to Rs1,025/t, with total power and fuel costs down by nearly 9pc to Rs48.39bn. Fuel typically accounts for about a third of cement production costs. The Argus cfr India 6.5pc sulphur coke assessment averaged $116.50/t in the quarter ended 31 March, down by nearly 32pc from the year-earlier average of $170.92/t. This price was last assessed at $109.50/t on 15 May. Thermal coal prices were also lower from a year earlier across most origins. Ultratech sold 35.08mn t of cement during January-March, up by 11pc on a year earlier. Higher cement sales typically boost coke and thermal coal consumption as cement producers use these as fuel in kilns. Industry participants were able to realise a higher profit despite a lower cement price during January-March, primarily because of a cushion from the reduced fuel costs. Ultratech realised Rs5,170/t of cement for January-March, down by 3.8pc from the year earlier and 6pc lower from October-December. Fellow producer Shree Cement raised its sales by 8pc from a year earlier to 8.83mn t over January-March. But the firm realised Rs4,721/t of cement during January-March, down by 3pc from a year earlier. Lower fuel costs helped it to boost the latest quarter's profits by 21pc from the previous year to Rs6.62bn. Fuel costs eased by 28pc to Rs1.82/unit. Shree expects fuel prices to remain stable in the coming months. Cement prices in key markets fell by an average 7.5pc over January-March from the previous quarter, while exit prices in March were lower by 9-10pc compared with average rates for the same period, said cement producer Dalmia Bharat. The price drop during January-March was far more than what the firm had seen in similar period in any previous year. Cement producers resorted to price cuts to gain more market in the latest quarter with rising production capacity. But cement demand growth is expected to outpace the rate of capacity additions in the coming years. The industry is expected to grow capacity at a compounded growth rate of 7-8pc/yr in the next few years, said Adani, which owns and operates listed cement companies Ambuja Cement and ACC. The group forecasts India's cement demand to grow at 8-9pc/yr over the next five years. Adani's power and fuel costs fell by 13pc from a year earlier to Rs1,219/t during January-March. A high share of coal from domestic captive mines and opportunities to buy imported coke will further lower its fuel costs, the company said. Ambuja doubled its January-March profit from a year earlier to Rs15.26bn. Firmer April-June outlook Lower priced coke cargoes purchased during January-March are expected to help cement producers partly offset the impact of pressured cement realisation for April-June, said a market participant. Cement prices remain weak as demand is affected because of India's 19 April-1 June general elections . Cement plants typically hold fuel inventories of 60-90 days, including supplies in the pipeline and cargoes on the water. The full benefit of reduced fuel prices comes with a lag of up to three months. This is especially true of coke cargoes coming from the US where the transit time is around 45 days. By Ajay Modi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Motiva shipping coke to multiple Texas terminals


24/05/01
24/05/01

Motiva shipping coke to multiple Texas terminals

Houston, 1 May (Argus) — US refiner Motiva has begun shipping petroleum coke from its Port Arthur, Texas, refinery to Corpus Christi, in addition to Kinder Morgan's Houston Bulk Terminal (HBT) and Deepwater Terminal, as it responds to an extended outage at its Pabtex terminal . Motiva has in recent weeks secured barge transportation to move some of its coke production to HBT and is using a railway close to its 626,000 b/d Port Arthur refinery to ship coke to Corpus Christi, about 300 miles south, according to multiple sources. It continues to rail some volumes to the Deepwater terminal , where it secured space in early April. The US Gulf's largest refinery, Motiva Port Arthur, produces roughly 250,000t/month of coke, requiring it to move about 10,000t/d in order to avoid filling up its on-site storage. Typically, the refinery ships this to the nearby Pabtex terminal, but storage space at that facility was already running low prior to the mid-March shiploader outage, sources said. The refiner early last month was said to have begun railing this quantity to Deepwater in Pasadena, Texas. But this is a large amount to move each day to more distant terminals by rail alone, and this seems to have prompted the refiner to seek barge transportation and the additional terminal space. The rail shipments could also be moving more slowly than anticipated. The refiner had in mid-April expected to begin loading cargoes from the Deepwater terminal on 22 April, market participants said. But by 23 April, the refiner was aiming to start loading vessels in mid-May. "We are hearing it's a slow go with the rails to get cargo built up in these terminals," a coke market participant said. Slower-than-expected shipments could potentially put the refiner in a difficult position, if its Pabtex terminal is approaching capacity, since it has little excess storage capacity at the refinery itself. This could lead Motiva to reduce run rates at its coking units. Running its cokers at lower rates would likely mean the refinery needs to sell more heavy products, such as high-sulphur fuel oil (HSFO). But sources have not yet seen excess HSFO offered in the market. "Pabtex is Motiva's single point of failure," another participant said. "If they're not going as fast as they would like, that would be a huge problem." The company did not immediately respond to a request for comment. By Delaney Ramirez and Lauren Masterson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US southbound barge demand falls off earlier than usual


24/05/01
24/05/01

US southbound barge demand falls off earlier than usual

Houston, 1 May (Argus) — Southbound barge rates in the US have fallen on unseasonably low demand because of increased competition in the international grain market. Rates for voyages down river have deteriorated to "unsustainable" levels, said American Commercial Barge Line. Southbound rates declined in April to an average tariff of 284pc across all rivers this April, according to the US Department of Agriculture (USDA), which is below breakeven levels for many barge carriers. Rates typically do not fall below a 300pc tariff until May or June. Southbound freight values for May are expected to hold steady or move lower, said sources this week. Southbound activity has increased recently because of the low rates, but not enough to push prices up. The US has already sold 84pc of its forecast corn exports and 89pc of forecast soybean exports with only five months left until the end of the corn and soybean marketing year, according to the USDA. US corn and soybean prices have come down since the beginning of the year in order to stay competitive with other origins. The USDA lowered its forecast for US soybean exports by 545,000t in its April report as soybeans from Brazil and Argentina were more competitively priced. US farmers are holding onto more of their harvest from last year because of low crop prices, curbing exports. Prompt CBOT corn futures averaged $435/bushel in April, down 34pc from April 2023. Weak southbound demand could last until fall when the US enters harvest season and exports ramp up southbound barge demand. Major agriculture-producing countries such as Argentina and Brazil are expected to export their grain harvest before the US. Brazil has finished planting corn on time . unlike last year. The US may face less competition from Brazil in the fall as a result. Carriers are tying up barges earlier than usual to avoid losses on southbound barge voyages. Carriers that have already parked their barges will take their time re-entering the market unless tariffs become profitable again. The carriers who remain on the river will gain more southbound market share and possibly more northbound spot interest. By Meghan Yoyotte and Eduardo Gonzalez Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

New US rule may let some shippers swap railroads


24/04/30
24/04/30

New US rule may let some shippers swap railroads

Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Barge delays at Algiers lock near New Orleans


24/04/24
24/04/24

Barge delays at Algiers lock near New Orleans

Houston, 24 April (Argus) — Barges are facing lengthy delays at the Algiers lock near New Orleans as vessels reroute around closures at the Port Allen lock and the Algiers Canal. Delays at the Algiers Lock —at the interconnection of the Mississippi River and the Gulf Intracoastal Waterway— have reached around 37 hours in the past day, according to the US Army Corps of Engineers' lock report. Around 50 vessels are waiting to cross the Algiers lock. Another 70 vessels were waiting at the nearby Harvey lock with a six-hour wait in the past day. The closure at Port Allen lock has spurred the delays, causing vessels to reroute through the Algiers lock. The Port Allen lock is expected to reopen on 28 April, which should relieve pressure on the Algiers lock. Some traffic has been rerouted through the nearby Harvey lock since the Algiers Canal was closed by a collapsed powerline, the US Coast Guard said. The powerline fell on two barges, but no injuries or damages were reported. The wire is being removed by energy company Entergy. The canal is anticipated to reopen at midnight on 25 April. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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