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A crash involving a ship carrying a cargo of scrap on Sunday left serious damage to a lock on the Moselle located in Müden, just south of Koblenz in western Germany.
The incident has caused a major blockage for ships traveling the Moselle to reach the Rhine – a vital artery for the shipment of metals such as aluminium and steel in Germany and Europe. Around 70 ships have been stuck along the Moselle on the way to the Rhine, Fastmarkets understands.
Repair works could last until March 2025, seriously disrupting the trade flows of steel and metal raw materials in Germany and across Europe, according to market participants.
Sources expect the disruption to raise freight costs for alternative transport methods and therefore prices for some raw materials, such as ferrous scrap, in the affected areas.
“In addition to the technical challenges of restoring the lock’s functionality as quickly as possible, the ships [are] stuck above Müden on the Moselle and Saar…Long periods of downtime for freight and passenger shipping represent an enormous economic burden,” the German Waterways and Shipping Authority (WSA) federal agency said on Monday.
“The WSA is therefore urgently looking for a solution to lock the ‘trapped’ ships into the Müden downstream area so that they can leave the Moselle in the direction of the Rhine and carry out other transports there,” the WSA said.
The Moselle is one of the most vital transport routes for shipping in Germany and Europe. So far in 2024, around 8.1 million tonnes of goods have been transported through the Müden lock, according to the WSA.
The majority of the transported goods are ores, steel raw materials, mineral products and fuels upstream, as well as agricultural and forestry products, and downstream iron and steel products.
Although most market participants said it was too early to define how the disruption could affect metals prices, steel market sources said they believed that freight prices will likely jump for alternative routes and transport solutions, and as a result prices for raw materials might move higher.
The main alternative methods to ship scrap metal would be via truck and rail, according to market sources. But if freight must be transferred to the road, around 80 truckloads of scrap would be needed to replace one barge of the steelmaking raw material, according to a German steel trader.
A Turkish scrap trader also said that the river accident was a reason why Turkish import scrap prices rebounded late on Tuesday on new deals from Europe and the US, after hitting their lowest levels since June 2022 earlier this week.
“The accident caused the downturn in the scrap markets to stop. This was also one of the factors that prevented [Turkish scrap import] prices from falling further. I believe it will affect the scrap industry throughout Europe,” a Turkish trading source said on Wednesday.
Fastmarkets calculated the index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey at $339.45 per tonne on Wednesday, up by $14.45 per tonne day on day.
Saarstahl and Dillinger, German steel companies based in Saarland, are both affected by the incident, Fastmarkets heard.
“Like other companies, the Saarland steel industry is also affected by the closure. We will quantify the extent over the next few days and use alternative transport solutions such as rail and lorries. Both incoming and outgoing goods are affected. We are working with all parties involved to find a quick solution,” the spokesperson of SHS Stahl-Holding Saar, a major shareholder in Dillinger and Saarstahl, told Fastmarkets on Wednesday.
Sources familiar with the matter also said that both raw materials supply and shipping of finished steel products might be affected, especially if repair works last for an extended period.
“For example, Dillinger also produces large steel heavy plates that can only be shipped by river – shipping those by truck or railway is not possible,” a buyer in Germany said.
Saarstahl runs three steel plants in Germany, in Voelklingen – where the company has a 2.6 million tpy basic oxygen furnace (BOF) and can produce sections and semi-finished products – in Neunkirchen, and in Burbach.
In Neunkirchen, the company produces 600,000 tpy of wire rod and 550,000 tpy of merchant bar, while in Burbach the company operates a 1.2-million tpy capacity wire rod mill, according to Fastmarkets data.
Dillinger has capacity to produce 2.7 million tpy of crude steel at its plant in Dillingen via BOF, while also running a plate mill with an annual capacity of 1.7 million tpy of hot-rolled plate.
A source at major steelmaker ArcelorMittal based in Luxembourg downplayed the impact of the incident on the company’s raw material supply.
The company sources most of its scrap via road and rail, and the duration of the repairs would be less than many feared, the source said.
“There will be no impact [on ArcelorMittal]. The lock will be repaired in a few weeks; scrap suppliers are creating hype to put some life into a dead market,” the source said.
“Seventy vessels are stuck, it’s true, but the repair process will be much faster…I expect it to be complete by January 15,” the source added.
On the impact on the steelmaker’s scrap supply, the source was confident there would be no disruption.
“We have more than enough inventory. We get 0-10% of our scrap from this route, and that is the expensive flow so we are happy not to get anything via this route. We are landlocked; the port is far away, so it’s not really significant,” the source said.
This position was echoed by the official comment from an ArcelorMittal spokesperson.
“The incident that occurred at one of the locks on the Moselle river in Germany should have a limited impact on ArcelorMittal’s activities in Luxembourg,” the statement, received by Fastmarkets on December 11, reads. “To date, only 10% of scrap supplies to ArcelorMittal’s electric furnaces in Luxembourg and 10% of shipments pass through the port of Mertert [the port on Moselle river through which raw materials and finished products transit for the ArcelorMittal sites in Luxembourg].”
ArcelorMittal’s logistics teams are currently working on alternative solutions, both in the short and medium term, to offset this disruption to incoming and outgoing flows, the spokesperson said.
“These solutions could involve receiving scrap volumes via the port of Koblenz and then transporting them by road and/or rail to the Group’s Luxembourg sites. For shipments, one solution would be to send sections and sheet piling by rail to the port of Antwerp. These solutions will be explored in the coming hours and days to define the most efficient logistical circuit possible,” spokesperson added.
ArcelorMittal runs two electric-arc furnace (EAF)-based mills in Luxembourg.
ArcelorMittal Differdange has an EAF with projected capacity for 1.4 million tpy of crude steel and a 1.2 million tpy sections mill, according to Fastmarkets data.
ArcelorMittal Belval runs a 950,000 tpy EAF and a 1.4 million tpy sections mill.
A major European scrap processor agreed that the effect on ArcelorMittal would be minimal, but said the effect on other mills could potentially be more significant, well as on scrap sellers through increased transport costs.
The processor said it had heard of steelmakers already rerouting scrap supplies from Italian steelworks to operations in Germany that were affected.
A second major European scrap processor agreed that several trucks would be required to cover the volumes shipped in one barge, saying that each barge would typically take 1,500-2,000 tonnes of ferrous scrap, but said he didn’t believe there would be any problem in sourcing more trucks despite the consequent higher demand level.
Only a third of scrap is typically transported by water in the western European market, he said, while the other two thirds are fulfilled by rail and truck.
The major disruption comes at an already challenging time for European scrap processors with EU scrap supply already under severe pressure throughout 2024.
This is due to slower economic activity and higher inflation rates both hurting scrap generation from manufacturing output and reducing the volume of goods being scrapped, according to market participants, while higher energy and labor costs in recent years have also hampered economic health in Europe.
Cem Turken in Mugla contributed to this story.