Rhine water levels slow EU steel feedstock trade

: Metals
26/07/09

Waterborne trade flows of steel feedstocks across central and northwest Europe have been slowed by falling water levels in the Rhine river, which has also pushed up shipping costs.

Water levels fell to 78cm at Kaub as of 1pm local time today, down from 85cm at the same time yesterday and 118cm on 5 July, data from Germany's federal waterways and shipping administrations WSV show. Kaub is a key bottleneck on the Rhine and an important reference point for commercial shipping.

Steel and raw material market participants have seen a direct impact on their logistics as a result, with strains on shipping and costs rising.

"Low water in the Rhine means less capacities and higher freight costs," one Germany-based metals recycler said. "We're facing that vessels will [only] be able to load about 40pc of the vessel's capacity."

A lot of material cannot be moved by ships, another recycler said, adding their customers are now trying to secure inflows through alternative transport means.

"There are big problems receiving raw materials," one steel mill source said. "We lose a lot of trains, which get cancelled, and now we have low water in the Rhine."

"Our barges can only load very low tonnages, which is very expensive," the mill source continued, adding that its raw material stocks are "very low".

Waterway freight rates have risen as a direct result, with estimations ranging 40-60pc increases. Rates for shipping to Rotterdam, a major export hub for Europe, from Mannheim, in southern Germany before the Kaub bottleneck, were cited at around €38-42/t ($43-48/t) today, one market participant said.

Warm weather is expected to continue, which could reduce water levels further, compounding logistic issues. Temperatures over 30 degrees Celsius are forecast for the south and the west of Germany heading into the weekend, according to the country's weather service DWD.

The Rhine, which stretches over 1,200km from the Swiss Alps to the low countries, is one of Europe's busiest waterways and a crucial shipping route for steel raw materials such as scrap and coal, as well as other commodities.

By Corey Aunger and Austin Barnes

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