- Strong Asia prices lift shipments from US
- Congestion spurs increase in eastward voyages
LNG tanker transits through the Panama Canal recorded a 12% increase from October through June compared with the same period a year earlier, report Platts quoting the Canal operator data.
That stretch includes a traditionally slow demand period during the spring, although for the recent case a red-hot market in part because of strong pricing in Asia spurred shipments, particularly from the US Gulf Coast.
Congestion at the Panama Canal
The dynamics have put US exporters in a good position this summer, while at the same time causing further congestion at the Panama Canal, the shortest passageway for LNG vessels between the US Gulf Coast and East Asia.
From Oct. 1, 2020, through June 30 — part of the 2021 fiscal year that ends in September — LNG transits through the Panama Canal totaled 393, compared with 350 for the same period a year earlier, a spokeswoman for the Panama Canal Authority said in an e-mail July 13 responding to questions.
The S&P Global Platts JKM — the benchmark price for spot-traded LNG delivered to Northeast Asia — has been on a bull run since early March, driven by persistent demand from the world’s largest importers. The JKM for August was assessed at $13.288/MMBtu July 13.
Longer waits
The Canal operator has been monitoring for high arrivals of LNG ships during the early part of July following a surge in transits during the final week of June. From June 25-29, 11 LNG vessels arrived with reservations and three without. One of those without a reservation won an auction slot to transit July 2, the agency that operates the Canal said.
Ships with reservations transit on their booked day, while those without reservations are subject to longer waits.
The higher round-trip economics from longer waiting times could begin to provide an incentive for even more eastward transits around the Cape of Good Hope. And in marginal cases, that could end up constraining some cargoes to the Atlantic Basin.
Reserved transit slot for LNG vessels
In February, the Canal administrator said the agency was working to add a third daily reserved transit slot for LNG vessels to ease congestion.
The Panama Canal closed its 2020 fiscal year — a period that was affected by the height of the coronavirus pandemic, US-China trade tensions, and tightening of environmental policies in the maritime industry — with combined LNG transit volumes of 46.4 million mt.
With three months left in the current fiscal year, LNG volumes were at 44.9 million mt, just shy of the prior-year total, according to the Canal Authority.
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Source: Platts
