German steelmaker, thyssenkrupp, told customers Friday it has declared force majeure due to low water levels on the Rhine River, according to a letter seen by S&P Global Platts.
There had been unconfirmed chatter in the market that such a decision was forthcoming, and then the company issued a letter to customers Friday morning confirming the move.
“We have been informed by our shipping company that push-tow shipping on the Rhine must be halted immediately due to the extremely low water level,” the letter stated. “This will severely disrupt the supply of raw materials to our production plants. This exceptional and unforeseeable situation is beyond our control and forces us to declareforce majeure with immediate effect for the supply of our products.
“The company will only be able to serve purchase orders on pro-rata [basis], taking production conditions into account.”
The letter said thyssenkrupp was “unable to provide reliable information on how long the force majeurewill last … our sales people will contact you immediately and keep you informed about the expected impact on the delivery dates agreed with you.”
A company spokesman confirmed the letter seen by Platts, as well as the force majeure.
Mills typically receive inputs such as iron ore, coking coal and slabs from the port of Rotterdam, which are then shipped to facilities on the Rhine. However, little rain has been seen in the region since May and water levels are expected to drop further over the weekend, according to the Waterways and Shipping Administration (WSV) website.
The water level at Duisburg-Ruhrort stood at 167cm early Friday morning and WSV forecast this to fall to 152cm by Tuesday morning. This is the lowest level since 2014.
The situation was leading to longer delivery lead times and higher transport costs, as some suppliers had to switch to trucks or rail freight.
“Barges that could take 2,000 mt can now only take 700 mt. Due to the water levels, more barges than normal are required to meet the demand,” a German service center source said. “There are limited alternatives, as rail is expensive with limited capacity, and in Germany, we have a well-documented shortage of drivers [for] road haulage.”
Low water levels on the Rhine have been supportive of ex-works Ruhr coils prices, which have held relatively stable this week despite prices in southern Europe continuing to move lower. The S&P Global Platts TSI hot-rolled coil index ex-works Ruhr was at Eur561/mt ($643.53/mt) Friday morning, down Eur6 since October 1.
Len Griffin, PLATTS