Industrial Companies Run Aground on Receding River Rhine
09 Novembre 2018 - 5:07PM
Dow Jones News
By Nathan Allen
Thyssenkrupp AG (TKA.XE) has become the latest victim of record
low levels at Germany's River Rhine, which has hit other
manufacturers that rely on the river to cool plants and transport
goods and raw materials.
The river, which runs more than 1,200 kilometers from its source
in Switzerland through Germany and the Netherlands into the North
Sea, is at its lowest level since 2003, according to Adriaan van
den Berg of Interrijn Group BV, which runs transport barges along
the river. A combination of low rainfall in the Swiss Alps and
higher-than-average temperatures has led to drought conditions for
the past five months, he said.
Late Thursday, Thyssenkrupp cut its 2018 guidance for the second
time since July, citing a range of issues across its divisions.
While the focus was largely on provisions booked against an
investigation into alleged price fixing, the group also cited
transport issues.
"We believe production and shipping issues in Steel Europe
likely accounted for over half of the hit, reflecting low water
levels in the Rhine and reduced deliveries due to WLTP," Jefferies
analyst Seth Rosenfeld said.
Carsten Riek at UBS said the division is likely to take a hit of
between EUR50 million and EUR60 million after losing around 200,000
tons of shipments due to the lack of water.
In October, ArcelorMittal SA (MT.AE) declared force majeure on
some material produced at its Duisburg site, which uses
Thyssenkrupp-produced pig iron as a feedstock, due to low water
levels.
The company didn't mention any financial impact but its broad
geographic footprint is likely to dilute any adverse effects on
group earnings.
Further down river, BASF SE (BAS.XE) has also had to cut
production at its flagship Ludwigshafen cracker to around 60%
capacity and has force majeure in place for 18 products.
During BASF's third-quarter analyst call, Chairman Martin
Brudermuller said earnings at several divisions were held back by
low water levels, which restricted raw-material supplies and
reduced the availability of water for cooling.
"In addition, we faced higher transportation costs since we had
to switch volumes from barges to other modes of transportation," he
said.
A number of other chemical companies have been affected,
including Belgium's Solvay SA (SOLB.BT), which said in August it
might not be able to honor all orders on time due to "the
persistent heat and drought" that lowered water levels.
Write to Nathan Allen at nathan.allen@dowjones.com
(END) Dow Jones Newswires
November 09, 2018 10:52 ET (15:52 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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