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Suez Canal blockage: Friday attempt to refloat stranded ship unsuccessful

Suez Canal blockage: Friday attempt to refloat stranded ship unsuccessful

An excavator is used to dig out the MV Ever Given, a 400m-long vessel lodged across Egypt's Suez Canal. (Photo: AFP)

CAIRO: An attempt to refloat the stranded mega-vessel blocking the Suez Canal has failed, the ship's technical manager Bernhard Schulte Shipmanagement (BSM) said on Friday.

The firm said the Dutch rescue team had confirmed that two additional tugs will arrive on Mar 28 to assist in refloating the ship.

READ: Suez Canal blockage sets shipping rates racing, oil and gas tankers diverted away

READ: Megaship blocks Suez Canal: What we know so far

On Friday, an official from Shoei Kisen Kaisha, the Japanese company that owns the Ever Given, said that crews were working to refloat the ship.

Egypt's Suez Canal Authority has said between 15,000 and 20,000 cubic metres of sand would have to be removed in order to reach a depth of 12m to 16m and refloat the ship.

READ: Suez Canal blockage may disrupt supplies to the region: Ong Ye Kung

However, salvage experts had warned earlier on Thursday the shutdown could last days or even weeks.

The company and its insurers could face claims totalling millions of dollars​​​​​​​ from the Suez Canal Authority for loss of revenue and from other ships whose passage has been disrupted.

The blockage could cost global trade US$6 billion to 10 billion a week, a study by German insurer Allianz showed on Friday.

Ratings agency Moody's expects Europe's manufacturing and car parts suppliers to be most affected because they operate "just-in-time" supply chains.

"Even if the situation is resolved within the next 48 hours, port congestion and further delays to an already constrained supply chain is inevitable," it said in a statement.

IMPACT ON OIL

About two dozen ships could be seen from the shores of Port Said on Friday morning, according to a Reuters witness.

Oil prices rose over 3 per cent on Friday as more than 30 oil tankers have been waiting on either side of the canal since Tuesday, shipping data on Refinitiv showed.

However, the delays come at a time of low seasonal demand for crude oil and liquefied natural gas (LNG), which will likely mitigate the impact on prices, analysts said.

Data intelligence firm Kpler said 10 crude oil tankers were awaiting entry to the canal. About 4 million barrels of mostly Kazakh CPC Blend and some Russian Urals were waiting along with tankers carrying Libyan, Azeri and some North Sea crude oil for Asian refiner, traders said.

READ: Egypt's Suez Canal: A history of the key route

Egypt's SUMED pipeline operator quickly approached crude traders to see whether they wanted to book space in the system but so far, traders prefer to wait to avoid high additional costs.

Analysts expect a greater price impact on smaller tankers carrying oil products, like naphtha and fuel oil, for export from Europe to Asia, if the canal remains shut for weeks.

"Around 20% of Asia's naphtha is supplied by the Mediterranean and Black Sea via the Suez Canal," said Sri Paravaikkarasu, director for Asia oil at FGE, adding that re-routing ships around the Cape of Good Hope could add about two weeks and extra fuel costs to the voyage.

The blockage is weighing on the already weak Asian gasoil, or diesel, market. More than 60 per cent of Asian exports to the west flowed via the choked Canal in 2020, according to FGE.

"Aframax and Suezmax rates in the Mediterranean have also reacted first as the market starts to price in fewer vessels being available in the region," shipbroker Braemar ACM Shipbroking said.

At least four Long-Range 2 tankers that might have been headed towards Suez from the Atlantic basin are now likely to be evaluating a passage around the Cape of Good Hope, Braemar ACM said. Each LR-2 tanker can carry around 75,000 tonnes of oil.

The cost of shipping clean products, such as gasoline and diesel, from the Russian port of Tuapse on the Black Sea to southern France jumped 73 per cent over the last three days to US$2.58 a barrel on Mar 25, according to Refinitiv Eikon data. 

The shipping index benchmark for LR2 vessels from the Middle East to Japan, known as TC1, has climbed by a third since last week to 137.5 worldscale points, said Anoop Jayaraj, clean tanker broker at Fearnleys Singapore. Worldscale is an industry tool used to calculate freight rates.

On the crude side, traders have had to pay 10 to 20 per cent more for replacement tankers but market freight rates have not yet risen as charterers are not ready to commit to higher levels in case the container is freed this weekend, shipbrokers said.

Source: Reuters/afp/ic

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