Congestion at Panama Canal Likely to Hinder LNG Supplies Until March
- Journalist: Francis Stokes
Despite of the few changes made to improve the present shipment speed, congestion in shipments of Liquified Natural Gas (LNG) at Panama Canal is likely to last for 2 more months. Although several regulators at the canal have reported to have adjusted the reservations on 4th Jan to reduce the congestion and allow additional 7-14 days ahead of the upcoming transits, but due to the present imbalance in the market fundamentals of LNG this is unlikely to adhere a prominent impact on the overall supply until March.
As the petrochemical market is already under pressure amidst the winter chills, supply shortage of LNG due to prolonged congestion at Panama Canal has led to an astonishing spike in its prices and has further widened the demand and supply gap of petrochemicals in the Asian market. LNG prices in the past nine months were observed to have risen by more than ten folds from the unprecedented lows encountered in April 2020. Furthermore, the week ending 18th January has marked the rise of LNG prices to more than USD 28 per British thermal units (mmBtu).
The sturdy demand for LNG from Asian countries has compelled several US LNG manufacturers with high export potential to direct their supply via an alternative route, the Cape of Good Hope, South Africa to the Asian market. However, this route doubles the time taken to deliver the cargoes to Asia from originally 15 days to 38 days.
ChemAnayst predicts that the consistent surge in LNG prices sparks a deeper trend in the international petrochemical market as various countries in the world including India and China are seen indulging in new contract deals in order to transition from coal, a highly polluting feedstock.