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The latest news and developments from Panama, one of the world’s most important shipping nations.

Panama bunkers - An unpredictable market

Panama Bunker sales showed some recovery in 2021, up 5.69% compared to 2020, to 5,016,513m tonnes reaching the highest level in two years in December, although still short of the 5.4m tonnes in 2019.

Seatrade Maritime

June 22, 2022

6 Min Read
Monjasa Panama
Monjasa

Download the Focus on Panama Q2 (2022) now for more detailed reports like this.

More vessels bunkered in Panama, up 6.08% to 7,029 ships, the Pacific side remaining the favourite location to buy fuels with 4,294,958m tonnes, up 7.87% while sales on the Atlantic side fell 5.69% to 721,555 tonnes.

The first quarter of 2022 was disappointing; sales falling 1.55% year on year, to 1,254,386m tonnes. The number of vessels taking bunker grew by 6.27% to 1,796. The Pacific side saw a decrease in sales of 3.93% to 1,070,852 tonnes while sales on the Atlantic side grew surprisingly by 15.6% to 183,534 tonnes as well as vessels attended by 27.4% to 340 ships.

Panama’s bunker suppliers warn that the fuel market is unpredictable and could be complicated by the situation in Russia and Ukraine. ‘Obviously, the whole situation in Russia marks a tightening of barrel availabilities globally in different products,’ says Carls Von Lindeman, leader of the Panama’s Chamber of Shipping Bunker Committee. ‘The opening of US reserves may help mitigate the situation and the market will try to balance itself, but I think high prices will remain for fuels in the coming months.’

‘January and February have generally always been months with high deliveries. However, historical prices of oil and oil products have forced shippers to manage their cash flows more tightly and make smaller purchases at various ports along the
ship’s journey. This could be one of several drivers explaining the slight decrease in sales,’ explains Juan Carlos Heilbron, Trader Tankers (TT) general manager and director of Melones Oil Terminal. Melones Oil Terminal is 2m-barrel fuel oil terminal in the Pacific
side of the Panama Canal.

Related:Special Report: Focus on Panama 2022

Monjasa, one of Panama’s main bunker players, had experienced a continued high activity level and strong demand on both sides of the Panama Canal throughout 2021. Overall, Monjasa Americas increased total volumes by close to 40% going from 1.4m tonnes to 1.95m tonnes of marine fuels with its Panama operations accounting for an important part of this growth, says Frederik Jungmark, Monjasa Trading Director Americas.

‘Based on the demand we are seeing from the start of this year; we believe that it is possible to further develop our Panama operation and build on the volumes supplied in 2021. It is hard to pinpoint which market is particularly affected by the war in Ukraine. The situation has disrupted trade from the region and pushed shipping markets towards other ports and routes to bring key commodities to consumers. However, material effects of these changes to global trade patterns are still to be seen,’ explains Jungmark.

Related:MSC to operate future 2.5m teu Panama box terminal

Since the Russian invasion of Ukraine in late February, Monjasa has halted all trading and supplies in Russia and with Russian counterparts and stopped purchasing oil products of Russian origin.

VLSFO is the preferred oil product across all markets and currently makes up some 65% of total volumes. ‘At the same time, we are recording an increasing demand for MGO representing around 20% of all product sales. High-sulphur products today represents less than 15% of our total volume,’ says Fredrik Jungmark.

Von Lindeman agrees that VLSFO is still the predominant product ‘and I think it will continue to be for a long time, but HSFO has been repositioning. Some product availability issues from Peru and Ecuador have been evident,’ he says.

‘VSLFO came into force with IMO 2020, indicating the maximum sulphur content limit and quicky became the main product sold in Panama. However, as ships enter and leave dry docks and scrubbers are installed, the demand for HSFO (sulphur content above 0.5%) increases. Additionally, the high spread between HSFO and VLSFO has further increased the case for using HSFO,’ comments Heilbron.

Statistics in 2022 show an increase in the number of vessels bunkering in Panama which is explained ‘when the oil price increases, the credit lines become tight. This usually results in a decrease in the sizes (volumes) of deliveries which generates a circumstance of just-in-time purchases of small sizes in various ports along the ship’s route,’ he said.

The Atlantic side has been traditionally less attractive for bunkering but for the first time, sales have increased at the Atlantic entrance of the Panama Canal. ‘The Panama Canal Authority has increased the anchorage area in the inner area of the breakwater, both for bunkering and for many other activities of the auxiliary maritime industries. We do expect this expansion to lead to more deliveries and volumes delivered in the Atlantic area, however we cannot say that this is directly one of the reasons for the reported increase in sales. Sales in the Atlantic sector have usually been constrained by limited anchorage area and high competition with other ports in the region offering similar services,’ Heilbron adds.

‘The new dredged areas have not been made available for bunkering yet. We have been in conversations and supposedly they will start soon, but no supplier has delivered to the new areas yet. We have concluded that the Atlantic Side has a Physical Limit and within that limit it is managed,’ adds Von Lindeman.

What to do for improving the bunker sector, sales, and facilities?

‘The Panama Canal Authority is managing this complex shipping hub well and Monjasa is here to further support positive developments. Together, we need to keep improving not only the locks and transits, but a full circle of shipping services that all together create an attractive global shipping destination. To name a few examples, we are currently finding ways to provide more flexible bunker operations on both sides of the Canal. In the Cristobal area, we are committed to offering the right logistics and enhancing flexibility for vessels taking bunkers both offshore and at anchorage. On the Pacific side, we are supporting the positioning of Panama as a preferred cruise line destination by working with the authorities to provide seamless bunkering services for this important and growing industry,’ comments Monjasa’s Jungmark.

‘We remain optimistic about the Panamanian market. All the players need to continuously keep working towards making Panama a more competitive bunkering hub. Expansion of anchorage areas (both in the Pacific and Atlantic), a clear and dynamic regulatory framework, further integration of assets and services to create a competitive hub, to name a few, are some of the areas where industry players and regulators need to work together,’ comments Heilbron.

‘The expansion of anchor areas is key to growing the market. This is a spearhead issue and one that we must not let up on (new anchorage areas for Neopanamax, reactivate deliveries in anchorage outside the breakwater and clean up areas that allow for more anchorage space),’ says Von Lindeman who calls for the implementation of a National Response Plan as of the extreme importance.

The latest Special Report on Panama features a comprehensive market briefing on Panama’s development as a cluster and how the region continues to thrive as an integral part of the global supply chain – as well as operational information, maritime services and market reports in Panama. Read the full report here.

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