18-04-2017

Ain’t no stopping now: More suppliers bolster Panama’s bunkering scene

bunker

“Pistons popping, ain’t no stopping now”: that’s how the rock group Van Halen described a certain Panama on their album 1984. Sure, the lyric may have been about some very different matter, but it happens to aptly describe an interesting and growing key bunker market.

In stark contrast to other regions where the number of bunker suppliers has been shrinking, Panama has been drawing interest to its bunker market with a growing number of suppliers, currently nearing 20 – albeit, some of them running small operations focusing on a specific niche market.

The local bunker market has seen volume growth fueled by the Panama Canal extension and all the storage facilities are fully committed with more facilities in the pipeline. Traders are also spoiled for choice when it comes to procuring cargoes, with Mexico, the US, Ecuador and Peru in the vicinity.

Panamanian bunker suppliers have been forced to become more efficient due to larger vessels waiting shorter times for transiting the canal and some have developed excellent blending capabilities. More modern barges have been introduced, with some suppliers claiming to operate barges with pumping rates of up to 800 mt/hour.

The market has traditionally seen annual volume of 3 million mt. However, the figure ballooned by around 50% to 4.5 million mt/year due to various factors including the expansion of the Panama Canal.

Against this backdrop of renewed interest in Panama, intense competition has narrowed operating margins with some players wondering how certain suppliers can sustain profitable operations at the prices sometimes seen in the market.

For example, IFO 380 CST bunker fuel is currently assessed at a premium of $20/mt over USGC HSFO, which would cover all transport, storage and running costs. There have been times, however, when premiums were substantially lower, at around $10/mt, as they were in early March 2017 or September 2016, which would not cover the additional costs.

The varying terms for cargo purchases and slightly different storage costs can help explain the differences in prices that the various players can offer. Further, some suppliers are operating barges with no capital costs attached whereas others may be paying unfavorable charter rates locked in at the wrong time. These are all plausible explanations, however, some market sources offer alternative theories.

First, there are allegations of some cargoes from Venezuela somehow hitting the market well below market levels; secondly, some suppliers bemoan that other players are still allowed to operate using very old barges; and finally, mutual accusations of delivered product shortages fly in all directions with one market source adamant that in certain cases such shortages can amount up to 20% of the stemmed volume.

Panama is probably no better or worse than other major bunkering hubs and perhaps more effective monitoring could dispel all the allegations. Meantime however, some suggest that future so-called Panama Papers releases might also shed light on the colorful bunkering scene in Panama.

Source: Platts 

Previous Next
 

In Conversation With Mr. Pradeep Rawat, Chairman National Shipping Board

View More Videos


Gallery

ISMS2017

View All Albums