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Panama Canal transit reduction impacts thermal coal shipments in Atlantic: sources

Panama Canal transit reduction impacts thermal coal shipments in Atlantic: sources

Coal ships are diverting their normal routes away from the Panama Canal, coal market sources said Aug. 2, due to rising vessel traffic delays at the C

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Coal ships are diverting their normal routes away from the Panama Canal, coal market sources said Aug. 2, due to rising vessel traffic delays at the Canal amid a reduction in the daily limit of shipments allowed to transit per day.

A market source said that when possible, coal ships heading to Chile from Colombiaare avoiding the Panama Canal and going through the Cape Hornaround the tip of Argentina, which is a longer but more reliable route, and — considering delays at the Canal — might be cheaper in the end.

“Coal traffic is being impacted and adjusting,” the same source added. “Small Capesize ships going to Mexico are split into two Panamaxes to facilitate the traffic. These are some examples of what’s happening. El Niño phenomenon has the potential of exacerbating the situation.”

In an advisory statement on July 25 to all shipping agents, owners and operators, the Panama Canal Authority, or ACP, said that daily transit capacity will be adjusted to an average of 32 vessels per day for an “extended period of time,” effective July 30.

Coal prices have seen mixed movements since the announcement from the ACP, but have all declined on the year.

Platts, part of S&P Global Commodity Insights, assessed the FOB Richards Bay 5,500 kcal/kg NAR price at $88.20/mt Aug. 2, down $21.20 from July 25 and down $270.60 from Aug. 2, 2022.

Meanwhile, the CIF ARA 6,000 kcal/kg NAR coal price was assessed at $110/mt on Aug. 2, up $4.75 from the July 25 price but down $279.95 from the Aug. 2, 2022, price.

Similarly, Platts assessed the CFR Pakistan 5,750 kcal/kg NAR coal price at $101/mt on Aug. 2, up $6.35/mt from July 25 but down $137.15/mt from Aug. 2, 2022.

“There will be some problems for Colombian coal, but not US origins because of limited sales,” a US-based coal trader said.

Over July 26-Aug. 2, twenty shipments of Colombian and US-origin material were shipped in total, containing 2.4 million mt of coal, shipping data from S&P Global Commodities at Sea showed.

Colombia shipped 1.3 million mt of material from Cerrjon, Drummond and Predeco mines. The top destinations included Turkey with 599,200 mt, Brazil with 249,700 mt, Ireland at 170,100 mt and the Netherlands with 169,600 mt.

Meanwhile, the US shipped 1.3 million mt from July 26 to Aug. 2,and top destinations included India taking 536,800, Egypt taking 168,000 mt, Morocco taking 153,100 mt and Japan taking 117,600 mt.

Asian coal supply
The US-based trader added that Asia has been the strongest coal market amid ample supply and low prices on Russian, Colombian, South African, Indonesian and Australian low-energy high-ash coals, as well as those from the Amsterdam-Rotterdam-Antwerp hub.

“The marginal ton is doing its job at killing this market,” the trader said. “This has been a perfect solution for Asian demand, which has been the strongest in the world. This year, despite Europe, we may see seaborn coal equal its highest volume set in 2019.”

However, a Pakistan-based trader said the Panama Canal delay will definitely have an impact on the Asian coal market.

“For Pakistan not much coal is coming from [the] US, but petcoke [is] with limited quantity,” the second trader said. “Mostly [coal going to Pakistan is] coming from South Africa and Indonesia.

Freight, LNG and bunkers impacted
Impacts on freight markets have translated into a $2-$3/mt freight premium for shipments out of the US Gulf Coast that typically transit through the Panama Canal, according to data from S&P Global, as the alternative sailing route through the Cape of Good Hope around the southern tip of South Africa remains the higher-cost option.

Coal markets are not alone in feeling the effects from the decrease in transit spots at the Panama Canal.

S&P Global previously reported that US-based natural gas company Cheniere is avoiding shipping LNG through the Panama Canal due to longer wait times, and additionally the limitations on traffic at the Canal have affected bunker fuel delivery and resupply in the Central American region, bunker sources said.

Fonte: hellenicshippingnews.com

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