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Argus Media: Panama MGO sales up but VLSFO demand dominates

03 Mar 2020

Stefka Wechsler of global energy and commodity price reporting agency Argus Media on Monday (2 March) issued a report analysing the domination of VLSFO in Panama bunker sales due to a VLSFO-MGO discount :

January 2020 0.1% sulphur marine gasoil (MGO) sales at the Panama Canal accounted for 14% of total marine fuel demand and 86% of residual fuel oil.

The share of MGO sales in Panama was up from 9% in January 2019 and January 2018 and 11% of total marine fuel sales in 2019.

The Panama port authority did not break down residual fuel oil sales into 0.5% sulphur maximum and 3.5% sulphur maximum. But local suppliers estimate demand for very low sulphur fuel oil (VLSFO) with 0.5% sulphur and high-sulphur fuel oil (HSFO) with 3.5% sulphur at 73-82% and 4-13% respectively of total Panama marine fuel demand.

By comparison, in the US suppliers estimate VLSFO at 57-62% of total marine fuel demand, HSFO at 5% and MGO at 33-38%. Data from the port authority of Singapore, the biggest bunkering port in the world, showed VSFO, HSFO and MGO sales at 71%, 19%, and 10% respectively for total January demand.

Panama sold 67,606t of MGO in January, up from 44,716t in January 2019. Fuel oil sales reached 409,733t in January, compared with 393,965t in January last year. Taking into account suppliers estimates, VLSFO sales were around 348,300-389,200t and HSFO around 20,500-61,500t the first month of this year.

The International Maritime Organization (IMO) regulation effective 1 January capped bunker fuel sulphur emissions content at 0.5% from 3.5%. Starting this year, high-sulphur resid is only sold to vessels outfitted with scrubbers. High-sulphur resid was mostly replaced by VLSFO sales in Panama, because VLSFO sells at a discount to MGO. The Argus-assessed Panama VLSFO–MGO discount averaged $31/t in February compared with $23/t in January. The VLFO–HSFO premium narrowed to $154/t in February from $273/t in January.

Panama, which does not have an operational refinery, relies on oil imports. Data from oil analytics firm Vortexa shows Panama importing residual fuel oil from the US Gulf coast, Peru, Ecuador, Chile, Argentina and Colombia. The bulk of Panama’s diesel imports — over 65% — are sourced from the US Gulf coast. Panama also imported diesel from Canada, China, Ecuador, South Korea and Russia among others.

Photo credit and source:
Argus Media
Published: 3 Match, 2020

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