LNG Shipments Through Canal Is a Boon, But Long Transit Delays Result In Suez Canal Emerging As Alternative

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Suez Canal emerges as Panama alternative for US LNG

Published date: 13 January 2021

Ongoing congestion at the Panama Canal has forced charterers looking to deliver US LNG cargoes to northeast Asia to seek alternative routes, with the Suez Canal emerging as the clear preference in recent weeks.

Transit of the Suez Canal had already increased for carriers with US cargoes that were loaded in December and en route to east Asia. Some 15 carriers with US December-loaded cargoes are set to cross the canal on their way to northeast and southeast Asian markets, up from two for December 2019-loaded cargoes, while Panama transits also rose to 22 from 13, according to Vortexa data. But deliveries to east Asian markets through the Cape of Good Hope rose only slightly to three from two. An increase in US export capacity partly explains the rises, with total December loadings climbing to around 88 cargoes from 54 a year earlier. And ample northeast Asian demand for Atlantic LNG has also spurred inter-basin cargo flows, driving demand for canal transits.

But 10 carriers laden with US cargoes loaded on 1-12 January are already set to transit through the Suez Canal, with a further seven heading towards the Mediterranean without a declared destination, of which at least some are likely to continue through Suez. Only eight January-loaded LNG cargoes are currently set to transit the Panama Canal, and a single cargo appears to be heading towards the Cape of Good Hope.

LNG carriers with US cargoes have faced significant delays at the Panama Canal throughout much of the past three months, as strong northeast Asian demand pulled US cargoes west through the canal into the Pacific at the same time as quick demand from other market segments emerged, while fog and Covid-19 protocols weighed on crossings, market participants noted. And with US liquefaction capacity ramping up significantly in the past year, the effect of the open LNG inter-basin arbitrage on demand for Panama crossings was more pronounced than in previous years.

LNG carrier congestion at Panama appears set to remain, although mainly for northbound crossings by empty carriers from the Pacific to the US Gulf seeking to return to load at US export facilities. The lower congestion for laden southbound crossings is likely a result of alternative routes being planned, as charterers seek to avoid the significant multi-day delays seen in late October-December.

By Samuel Good

ANEA near-curve in steep backwardation $/mn Btu

 

 

US LNG exports rise mn t LNG

 

https://www.argusmedia.com/en/news/2176633-suez-canal-emerges-as-panama-alternative-for-us-lng

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Panama Canal Transit Sees 10 Day Delays

essels transiting through the Panama Canal have are now experiencing up to 10 day delays as the industry struggles to understand the cause and find a solution to the deteriorating conditions. According to the Journal of Commerce, adverse weather conditions and repairs to the existing locks are contributing factors. What is certain is that carriers have begun to take more aggressive steps, such as canceling some sailings through the canal to try and reduce the backlog of vessels. The average transit time through the canal is 24 to 30 hours which means that current conditions must improve considerably before the situation returns to normal. Congestion started to build in mid-October. Currently, there are over 20 vessels awaiting transit through the canal.

Shapiro will continue to monitor canal conditions and will provide updates on continued delays and vessel cancellations.

Shapiro is also available to help customers design alternate routings.

 

https://www.shapiro.com/alerts/panama-canal-transit-sees-10-day-delay/

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LNG  demand a boon for Canal

Posted 24/01/2021

The price of liquefied natural gas (LNG ) has skyrocketed since 2020  to the benefit of the Panama Canal as major Asian countries like Japan,  South Korea,  China and Taiwan seek supplies to generate power.

It has also been reflected in the daily rental cost of the vessels that transport LNG, which has generated a great demand for transport, an aspect that favors the Panama Canal as the shortest maritime route between the production sites in The United States and consumer markets in Asia.

For much of 2020, LNG was selling for $ .00 per million caloric unit (BTU), because of low consumption due to the pandemic.

But, by the end of 2020 and January 2021, both the price of LNG and the daily vessel rental skyrocketed up to tenfold, to $20 per million BTUs and $350,000 daily for a vessel rental. The high demand should last until March when winter ends, and the price of LNG is expected to fall.

 

https://www.newsroompanama.com/business/lng-demand-a-boon-for-canal