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.
