European players face delays after rail closure in South Germany

According to media reports, the closure of rail line in southern Germany due to a construction work is causing disruptions in shipments and driving transportation fees higher for the chemical industry. The construction work is taking place near the city of Karlsruhe. Operators had to close the line after the track subsided while Deutsche Bahn was drilling in a new tunnel. Deutsche Bahn is working on finding alternative routes to carry out the transportation process smoothly. Karlsruhe-Basel railway line will reportedly remain closed until October 7.

German Chemicals Industry Association (VCI) said that approximately the half of raw material shipments to chemicals plants and products to their customers could be diverted via alternative rail routes, but the remainder would have to be transported by truck or ship.

Major chemical sites owned by BASF, Evonik, Covestro, Lanxess and Ineos are connected to this railway. Other global producers Dow Chemical, DuPont and LyondellBasell also have sites in Germany.

This news has already triggered woes about supply deliveries among market players and some suppliers have boosted their prices in the wake of disruptions.

A converter in the medical sector concluded a PVC deal in late August, paying €15/ton increases for West European material. The buyer said, “Our supplier has already applied a small increase on our prices, before waiting for September ethylene contracts and PVC prices, as they had some transportation issue in Germany.”

A buyer in Italy also confirmed that they expect delivery delays following the transportation issues related to the railway suspension. This might give an upper hand to the suppliers along with the expected lack of import flows following a number of shutdowns due to Hurricane Harvey.