Suez has lingering impact on Europe while Maersk suspends bookings
Europe is suffering a lingering impact from the Suez Canal closure, with delays in deliveries of up to two weeks, while Maersk, the world’s largest shipping company has suspended short term bookings.
Although the canal reopened on March 29 after being blocked for six days by the Ever Given, one of the world’s largest container ships, it will take several days to clear the backlog of ships, which numbered 292 on March 31, according to transport group Leth Agencies.
Although the canal is now open, there is also the possibility of further congestion at destination ports as a higher number of ships than usual arrive in the coming days. Maersk said in a letter to customers on March 31 that the Suez closure impact has displaced ships, forcing it to stop taking short term orders on exports out of Asia, Europe, North America, Latin America and Africa.
Many European chemical markets had already been affected by supply shortages, panic buying and spiralling prices as the coronavirus pandemic disrupted global logistics systems. A spate of force majeures and the forthcoming turnaround season could tighten supply further. Demand has also rebounded strongly since the second half of 2020 and the closure will affect sentiment in chemical markets already starved of supply.
Europe base oils face particular challenges because less travel has led to lower refinery run rates which have cut availability and caused real supply shortages plus triple-digit price increases. The Suez closure makes matters worse.
Heavier viscosity grades remain particularly short and Group III imports are expected to be delayed due to the Suez Canal blockage.
One Group I base oils producer told ICIS: “Again it’s another in the round of problems that are leading to huge increases. It’s just incredible what these are guys are having to deal with.”
A distributor added: “The market will be for sure influenced from the Suez issue. We hear from customers that [a Middle East producer] got stuck in the queue and is now cutting volumes.”
Other base oils producers and buyers expected delays of between 5-6 days and a week for shipments coming through the canal.
A trader added: “Shippers are not taking bookings if it goes through the canal right now. I don’t know how long it will take to recover. Heard there was a jam that could take several weeks to clear.”