Panama Canal’s Additional Slot Could Ease Asia’s LPG Supply Uncertainties: Sources
The Panama Canal Authority’s move to add an additional daily Neopanamax transit slot from next month could provide some relief to Asia’s LPG market participants facing continued supply uncertainties, sources said.
According to a PCA notice posted on Monday, the additional slot will take effect from Oct. 15 as improving water conditions allow the Canal to increase capacity. The move will raise daily Neopanamax transits to 10 from nine and total daily transit capacity to 33.
The PCA also raised the maximum authorized draft for vessels using the Neopanamax locks to 14.94 meters, or 49 feet, from the previous 48 feet.
The easing of restrictions follows the PCA’s late August announcement of a series of transit cuts due to El Nino conditions. Transit slots were cut to 34 beginning Sept. 4 and further reduced to 32 by mid-September, OPIS reported earlier.
Shipping sources said the increase in daily transits could ease competition for Panama Canal slots and allow more U.S.-Asia LPG cargoes to move through the waterway, providing potential relief to Asia’s supply situation as Middle East tensions persist and regional supply remains disrupted.
Tight supply in Asia has also increased competition among buyers to secure cargoes, prompting sellers to raise offer levels amid limited availability, analysts added. This has resulted in a series of tender cancellations in September, with importers rejecting offers deemed higher than prevailing market levels. Six tender cancellations have been tracked so far this month.
Panama Canal restrictions have also contributed to higher freight rates by increasing waiting times and keeping vessels tied up for longer. The OPIS-assessed Houston-Chiba very large gas carrier freight rate rose above $300 per metric ton in mid-September and closed at $327/mt on Monday, a four-month high.
The September monthly average for Houston-Chiba freight so far stands at $303/mt, up from August’s average of $268/mt, OPIS data shows.
–Reporting by Cheryl Lee, cheryl.lee@dowjones.com; Editing by Mei-Hwen Wong, mei-hwen.wong@dowjones.com