50 ppm ARA barges at seven-month low on logistics, tepid demand
London (Platts)--22 Oct 2015 851 am EDT/1251 GMT
50 ppm gasoil barges hit a seven-month low Wednesday, as logistical
issues on German waterways that have plagued the Northwest European
barge market for months coupled with uninspiring end-user demand
weakened the market further.
50 ppm gasoil barges were assessed at a discount of minus $17.25/mt to
the front-month ICE low sulfur futures contract, the lowest since March
11, when the market was assessed at minus $19.25/mt.
High barge freight rates as a result of chronically low waterways in
inland Germany are exacerbating weakness in a market already lacking
substantial demand.
The cost of moving a barge from Rotterdam to Basel in Switzerland, which
also the demand center for 50 ppm, reached a fresh near-four high of
$81.55/mt Wednesday.
Use of alternative transport systems in Germany, such as pipelines
and railcars, was also heard to be problematic as they were operating at
capacity.
Demand has been stymied to some degree as end users await cheaper
product and cold weather-inspired buying has failed to substantially
materialize.
"The problem is you can't get it to end users," a source said. "But it
is warm weather now so why you would buy it?"
This sentiment was echoed by others in the market. "[Demand is] steady
but not picking up... end-user tanks are pretty full," a source said.
"Maybe people are waiting for cheaper prices."
While demand for 50 ppm gasoil in Northwest Europe is focused primarily
on Germany, Belgium's move away from 0.1% gasoil to its less sulfurous
cousin on January 1 is set to expand the market, further reducing
already declining demand for 0.1% in the region.
"With Belgium moving to 50ppm in January that is a market of 3 million
tons a year that disappears," a source said.
This would leave France as the last significant outpost in the region
using 0.1% to meet heating needs.
--George Shaw,
george.shaw@platts.com
--Edited by Jonathan Fox,
jonathan.fox@platts.com
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