German steelmaker Thyssenkrupp has reduced steel output at its Duisburg plant after low water levels on the river Rhine disrupted raw material supplies, a company spokesperson confirmed to McCloskey on 15 July.
The extent of the cuts were not disclosed though the disruption has not affected steel product deliveries, according to both the steelmaker and German buyers.
“The persistent and worsening low-water situation on the Rhine is now affecting the supply of raw materials to Thyssenkrupp Steel’s Duisburg site,” the spokesperson said. “The current development is leading to constraints in our raw material supply. We have therefore already adjusted our hot metal production accordingly. Customer supply is currently not at risk.”
The steelmaker has taken its own push-barge fleet out of service and switched to externally chartered vessels, which can continue operating because of their lower draft under the current water-level conditions.
Market sources said the low water levels are creating logistical constraints because not all vessels can operate, while those that remain in service cannot always sail at full capacity. Raw material deliveries are more exposed to river transport disruptions, whereas most finished steel products are transported by road or rail.
Although steel deliveries have not been affected, the disruption has further supported bullish sentiment in the European flat steel market.
Domestic hot-rolled coil (HRC) prices in Northwest Europe have already increased by around EUR20/t over the past week, due to the impact of the EU’s new import quota system, which has significantly reduced access to overseas material.
McCloskey assessed domestic HRC prices at EUR710/t ex-works Northwest Europe on 10 July.
“This is a typical narrative from the mills to support price increases, like the issues with the railway companies reported in June. These narratives have some truth in them,” a German distributor said.
In June, German steelmakers reported severe raw material supply disruptions caused by a combination of persistent rail freight congestion and strict loading restrictions on the Rhine.
Author: Benjamin Steven
