LPG bunker demand lags despite competitive pricing

: Freight, LPG, Oil products
24/10/29

LPG is seen by shipowners as one of the least expensive fuels for meeting new low-carbon emission rules, but spotty safety rules, a lack of bunkering infrastructure or four-stroke engines able to use it is holding back demand.

LPG has been price-competitive with LNG and at a significant discount to B30 biodiesel, bio-methanol and blue ammonia and green ammonia this year, according toArgus. (see chart).

Taking into account the cost of CO2 traded on the EU emissions trading system (ETS), northwest Europe LPG was pegged at $577/t from 1-28 October compared with LNG at $614/t average (see chart). The EU's ETS for marine shipping started this year and requires ship operators pay for 40pc of their greenhouse gas (GHG) emissions generated on voyages in the EU. Next year, ship operators will have to pay for 70pc of their CO2 emissions.

LPG is one of the fuels that can help ship operators comply with the FuelEU for the next ten years. Starting on 1 January 2025, the EU's FuelEU regulation will require a 2pc cut in the lifecycle greenhouse intensity for bunker fuels burned in EU territorial waters compared with 2020 base year levels. The reduction jumps to 6pc from 2030 and gradually reaches 80pc by 2050.

LPG's lifecycle GHG emissions footprint varies depending on its production pathway. It is pegged at about 81.24 grams of CO2-equivalent per megajoule (gCO2e/MJ), according to technical support documentation from the California Air Resources Board. At this carbon intensity level, LPG is compliant with FuelEU's GHG limit set at 85.69 gCO2e/MJ through year 2034, similar to LNG.

There are 151 operational ships with LPG-burning engines, with another 109 vessels on order by 2028, according to vessel classification society DNV. LPG bunker demand more than doubled to 242,292t in 2023 compared with 101,447t in 2022, according to the latest International Maritime Organization (IMO) data collected from vessels of 5,000 gross tonnes and over.

But LPG bunker demand was dwarfed by comparison with LNG bunker demand, which was at 12.9mn t in 2023, up from 11mn t in 2022, according to the IMO. There were over 700 LNG burning vessels operational this year, with the number growing to 1,162 by 2028, according to DNV data. LPG accounted for 0.1pc and LNG for 6.1pc of global marine fuel demand from vessels with 5,000 gross tonnes and over in 2023.

LNG as a marine fuel has been around longer than LPG. The World Liquid Gas Association, a trade association, began exploring the use of LPG as a marine fuel in 2012. The first LPG-fueled very large gas carrier BW Gemini was retrofitted to burn LPG in 2020. By comparison, LNG for bunkering by LNG carriers have been around since the 1960s. The first LNG-powered container ship was delivered in 2015.

The bulk of the global LPG bunker demand came from LPG carriers. LPG carriers outfitted with LPG-burning engines can burn their own cargo, taking advantage of the ships' existing infrastructure and safety systems and minimizing their operating costs. But LPG demand from other major types of bunker-consuming vessels, such as container ships, dry bulk carriers and oil tankers, is lagging. One reason is only two-stroke LPG-burning marine engines are commercially available, says vessel classification society Lloyd's Register. Typically, large vessels use two-stroke engines for propulsion and four-stroke engines as auxiliaries, meaning auxiliary engines on vessels would need to be decarbonised through an additional fuel, says Lloyd's Register.

LPG has a well-developed global network of import and export terminals. But LPG for bunkering port infrastructure, such as dedicated bunkering storage tanks and LPG bunkering barges, is mostly lacking.

Unlike LNG for bunkering, LPG for bunkering regulatory guidelines are currently patchy. If leaked onto water, LPG rapidly vaporises and then sinks to the surface of the water given it is heavier than ambient air. If it ignites, it can create a "pool fire" that can spread and cannot be extinguished, continuing to burn until all the LPG is consumed, Lloyd's Register says.

By Stefka Wechsler

NW Europe selected alternative marine fuels $/t VLSFOe

NW Europe, 1-28 Oct avg $/t VLSFOe

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24/12/24

Viewpoint: US ethane to be oversupplied for 2025

Houston, 24 December (Argus) — US ethane production growth will likely continue to outpace exports and domestic demand into the first half of 2025, keeping US inventories of the natural gas liquid in record territory until export capacity expands late next year. Ethane, which is widely used for ethylene production at US steam crackers, has emerged as the lowest-cost petrochemical feedstock worldwide, spurring infrastructure investments in Asia, particularly China, to receive US ethane exports. Still, US ethane production from gas processing continues to outpace the country's ability to ship it into demand centers in Europe, India and China. Mont Belvieu, Texas, EPC ethane spot prices fell relative to natural gas in 2024 due to record ethane production, leaving ethane stocks oversupplied entering 2025. EPC ethane's premium to its fuel value in Nymex natural gas at the Henry Hub averaged 3.25¢/USG during 2024, 54pc lower than in 2023. It also averaged a 1.75¢/USG premium to its fuel content in the second half of 2024, 77.5pc lower than the same period last year, as spot ethane prices fell on ample supplies. Cheaper natural gas in the Permian basin spurred higher rates of ethane recovery from the natural gas stream and led to a disproportionate rise in ethane production. Spot prices for natural gas at the Waha hub in west Texas across the year averaged -$0.10/mmBtu, with prices remaining negative for eight of nine months from March-November. Prices were consistently positive in 2023, averaging $1.66/mmBtu across the year. Negative Permian gas prices allow ethane recovery from the gas stream at a much lower cost. US natural gas production in 2024 is poised to be steady to slightly down, having averaged 3.14tcf in monthly production from January to September, according to US Energy Information Administration (EIA) data. Meanwhile, ethane production is set to reach a record high for the 11th consecutive year, with monthly production averaging 2.78mn b/d over the same period, up from a 2.65mn b/d average over the whole of 2023. Waha gas prices turned positive in the second half of November and spiked to a multi-month high of $2.56/mmBtu on 2 December, pushing ethane prices to a 13-month high of 25.625¢/USG the following day as downstream buyers bid higher to fulfill contracts for the month . Ethane's rally was brief, however, with Mont Belvieu prices falling to 22.5¢/USG over the next week even as Waha climbed further. Record ethane inventories Ethane inventories hit record highs in 2024, according to EIA data, including a peak of 80.89mn bl in July, 79.5mn bl in August and 77.23mn bl in September. Mont Belvieu ethane has also been in backwardation in December, with January prices at a 2-4c discount to prompt December prices, encouraging selling interest. Sustained cold weather and additional surges in natural gas spot prices may further draw down ethane supplies as higher volumes are rejected into the gas stream, market participants suggest, but as it stands, ethane supplies are likely to remains at or near record highs for the first part of the new year. In the EIA's most recent Short Term Energy Outlook (STEO), the agency projects ethane inventories to end 2024 at 74.1mn bl , which would be a year-end record following a seasonal draw down, and 12.6pc higher than a year earlier. In that same report, including projections for the fourth quarter, domestic consumption of ethane is estimated to be 2.26mn b/d in 2024, up by about 98,000 b/d on the year, and net exports are estimated at 483,000 b/d, up by around 13,000 b/d, whereas production of ethane from natural gas processing is expected to be 113,000 b/d higher at 2.77mn b/d. Playing catch-up If projections are accurate, 2024's record end-of-year ethane supply will exceed the peak previously set in 2020 of 69.6mn bl, based on EIA data. The first VLEC loadings at Energy Transfer's 180,000 b/d Nederland, Texas, export terminal began in January of 2021, resulting in year-end inventories reaching a relative trough in 2022 at 53.55mn bl before rebounding by nearly 50pc in the last two years. Domestic ethane consumption growth has kept pace with or fallen behind growth in production since 2020. Conversely, ethane exports in 2021 jumped by 98,000 b/d to 369,000 b/d on the opening of the Nederland terminal and grew more slowly in 2022 and 2023. Exports of US ethane are limited by infrastructure at receiving terminals abroad and the specialized vessels required to ship the lighter feedstock. Overseas markets are gearing up to take ethane imports over the next few years , and US ethane inventories are likely to continue building ahead of of an expansion to domestic export infrastructure as US production grows further. Enterprise's Neches River export terminal in Beaumont, Texas, is the next scheduled US expansion and is set to complete its first phase in the third quarter of 2025 , adding 120,000 b/d of ethane export capacity. Completion of the second phase in the first half of 2026 would take this capacity to a total of 180,000 b/d. The project, if it remains on track, should curtail ethane inventory growth at the back end of 2025. Until then, abundant supply probably will continue to weigh on spot prices, and the first half of 2025 may see ethane prices fall further, both outright and relative to natural gas, especially since the EIA's outlook also forecasts gas prices to rise through the winter. By Joseph Barbour Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US Gulf high-octane component prices to rise

24/12/24

Viewpoint: US Gulf high-octane component prices to rise

Houston, 24 December (Argus) — Cash prices of high-octane gasoline blending components in the US Gulf coast are likely to rise in 2025 after a year of declines as lower refining capacity starts to thin stocks. Alkylate and reformate cash prices and differentials have been lower over the course of 2024, in part from weaker refining margins. The lower margins are reflected in the region's crack spreads, which narrowed to $12.94/USG on 19 December from $18.67/USG a year earlier, as abundant supply in the region met weak demand . Inventories in the region have also been lower over the course of the year. Stocks in the region fell in November by 2pc from a year earlier to an average 29.75mn bl. US Gulf coast crack spreads have been declining steadily since 2022, according to the Energy Information Administration's (EIA) November Short-Term Energy Outlook, brought on by lower overall product demand, especially for gasolin e . But the EIA expects spreads to hold steady next year, even with a decrease in refining capacity, potentially supporting prices for high-octane components. The upcoming year will also bring a significant refinery closure to the region, which should reduce production and raise cash prices of components such as alkylate and reformate. LyondellBasell's closure of its 264,000 b/d Houston, Texas, refinery is scheduled to start in January. The refinery's fluid catalytic cracking unit (FCC), which converts vacuum gasoil primarily into gasoline blendstocks, is expected to be shut in February, followed by a complete end to crude refining by the end of the first quarter. US total refining capacity should fall to 17.9mn b/d by the end of 2025, according to the EIA, 400,000 b/d less than at the end of 2024, with the lower production leading to price increases. Although the LyondellBasell closing should eventually give crack spreads in the region a boost, some in the industry do not expect a return to pre-pandemic levels of refining margins in the immediate future. CVR Energy chief executive David Lamp said in November the company needed "to see additional refining capacity rationalization in both the US and globally" for crack spreads to gain ground. An increase in consumer demand for gasoline would also support a rise in cash prices and differentials for high-octane components. But the EIA in December forecast consumption nationwide would rise in 2025 by only 10,000 b/d, or 0.1pc, to 8.95mn b/d. By Jason Metko Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Логистика сухих грузов - Союз ОВС: договорились с РЖД о снятии ограничений

24/12/24

Логистика сухих грузов - Союз ОВС: договорились с РЖД о снятии ограничений

Moscow, 24 December (Argus) — Объем строительства грузовых вагонов по итогам 2024 г. ожидается на уровне 75 тыс. единиц, или на 18% больше, чем годом ранее. Участники рынка опасаются серьезного спада в 2025 г. ввиду ограничений на вывод нового подвижного состава на сеть со стороны РЖД в рамках плана по сокращению рабочего парка на путях общего пользования. Впрочем, отраслевой ассоциации удалось договориться с перевозчиком о совместной работе по выходу нового парка с производственных предприятий. О спросе на вагоны, а также о вызовах, стоящих перед отраслью, рассказал Argus исполнительный директор Союза Объединение вагоностроителей (ОВС) Евгений Семенов. — Сколько вагонов построили российские заводы с начала года? Как изменилось производство по сравнению с 2023 г.? — В 2024 г. вагоностроительная отрасль продолжала наращивать объемы производства: по итогам января — ноября было построено 67,3 тыс. грузовых вагонов, на 17% больше, чем за аналогичный период прошлого года. Спрос на парк оставался устойчивым на протяжении всего года, несмотря на внушительные цены, а также высокую и постоянно повышающуюся ключевую ставку Центрального банка России. Доля выпуска инновационного парка составила 28% — по итогам 11 месяцев было выпущено 19,2 тыс. вагонов с улучшенными характеристиками, на 15% больше, чем годом ранее. Считаем, что это отличный показатель, особенно если принять во внимание тот факт, что один из основных производителей такого подвижного состава, Уралвагонзавод (Свердловская обл.), сейчас работает не на полную мощность по выпуску такой продукции. — На какие вагоны в этом году спрос оказался наиболее высоким? — В процентном выражении наиболее существенный прирост зафиксирован в сегменте цистерн — на 49%, до 11,4 тыс. единиц, из которых 1,7 тыс. бочек были с улучшенными характеристиками, что на 75% больше, чем в январе — ноябре прошлого года. Российские заводы выпустили 8,3 тыс. нефтебензиновых цистерн — на 75% больше, чем годом ранее, и 2,4 тыс. химических — прирост к аналогичному периоду 2023 г. составил 94%. Кроме того, было построено около 700 цистерн для перевозки сжиженных углеводородов. По этому сегменту фиксируется падение на 57% к показателям прошлого года. Общая доля вагонов-цистерн составила 17%, что на 4 процентных пункта больше, чем годом ранее. Отлично выступили производители полувагонов, построившие за 11 месяцев 26,2 тыс. единиц, в том числе 11,2 тыс. инновационных вагонов, на 23% больше, чем годом ранее. Активно рос спрос на крытый подвижной состав, таких вагонов было выпущено 5,2 тыс. — доля в общем объеме производства составила около 8%, прирост к 11 месяцам 2023 г. составил 23%. Хопперы, как и прежде, занимают заметную долю — более четверти — на рынке вагоностроения, однако относительно прошлого года объемы выросли незначительно, на 4%, до 17,6 тыс. единиц. В основном это были вагоны для перевозок зерновых грузов — 15,4 тыс. единиц, или на 24% больше, чем годом ранее. Выпуск минераловозов в этом году снизился на 52%, до 1,9 тыс. единиц, а цементовозов — на треть, до примерно 300 штук. Спрос в указанных сегментах, включая вагоны как для перевозок сухих грузов, так и для налива, был обусловлен общерыночными тенденциями, главным образом — замедлением оборачиваемости подвижного состава. Это потребовало большего числа вагонов даже при сохранении объемов грузовой базы — чтобы не попасть на штрафы по ранее заключенным договорам с грузоотправителями, собственникам приходилось наращивать объемы парка. В сегменте платформ в январе — ноябре произошло падение производства на 36%, до 6,8 тыс. единиц. В том числе было построено 5,8 тыс. фитинговых платформ для перевозок крупнотоннажных контейнеров, на 16% меньше, чем годом ранее, а также 1 тыс. универсальных платформ — снижение составило 71%. Это связано с крупными объемами строительства фитинговых платформ в предыдущие годы, рынок насыщен таким парком. Что касается сегмента универсалок, операторы заявляли о сложившемся профиците парка во втором полугодии. — С какими вызовами отрасль столкнулась в уходящем году? — В этом году, как мы считаем, вагоностроителям удалось решить кадровую проблему. С ней отрасль столкнулась еще в 2022 г., но по-настоящему мы ее прочувствовали в 2023 г. Разумная кадровая политика, организация работы по обучению новых сотрудников — как студентов, так и состоявшихся специалистов, которым требовалась переквалификация в техникумах и непосредственно на предприятиях, применение вахтового метода работы — эти и прочие меры позволили отрасли увеличить суммарные возможности выпуска вагонов до 75 тыс. единиц в год по сравнению с 63,5 тыс. единиц годом ранее. Однако полная реализация этого потенциала пока под вопросом. — Повлияли ограничения со стороны РЖД? — Разумеется. Текущих мощностей безусловно хватает, чтобы построить в декабре почти 8 тыс. вагонов и выйти на 75 тыс. единиц по году. Однако для этого вновь построенный подвижной состав должен покидать производственные площадки и выходить на сеть РЖД. По состоянию на 12 декабря 4,2 тыс. новых вагонов оказались запертыми на заводах — госкомпания не согласовывала их перемещение за пределы предприятий. — Какие перспективы для отрасли видите в наступающем году? — Мы рассматривали на 2025 г. несколько сценариев. С одной стороны, вагоностроительные заводы слышат своих клиентов и продолжают вкладываться в развитие, наращивание мощностей. Скажем так, отрасль готова удовлетворить спрос рынка на уровне 85 тыс. вагонов всех родов в год. С учетом тенденций рынка, грузовой базы и объемов списания устойчивый спрос в период 2025—2026 гг., на наш взгляд, сохранится в сегментах цистерн, полувагонов, крытого парка и хопперов. В частности, заводы уже заключили контракты на производство примерно 15 тыс. цистерн, включая нефтебензиновых и химических. С другой стороны, ограничения со стороны железнодорожной госкомпании пока еще сохраняются. Ввиду этого мы рассматривали различные сценарии: от 50—60 тыс. единиц до 20 тыс. штук — но последний уже откровенно апокалиптический. Здесь уже затрагиваются интересы не только владельцев железнодорожной инфраструктуры и вагоностроителей, но и грузоотправителей из большого числа отраслей, которые рискуют недополучить парк под погрузку и сократить объемы вывоза продукции. Остро ощущалась необходимость сесть за стол переговоров и обсудить дальнейшую стратегию РЖД — отсутствие внятного планирования грозило негативно сказаться на всех участниках рынка грузоперевозок. — Встреча все же состоялась и закончилась, насколько известно, на позитивной ноте? — Да, в середине декабря мы провели встречу с руководством РЖД, по итогам которой удалось достигнуть компромиссов по большинству вопросов. Обсудили необходимость обеспечения непрерывного допуска новых грузовых вагонов, их регистрации и направления адресатам. По состоянию на 19 декабря число новых вагонов, запертых на предприятиях, достигло 5,8 тыс. единиц, однако уже 23 декабря на сеть вышло более 1,4 тыс. вагонов, планирование их отправки с заводов осуществляется в ежесуточном режиме. Согласно предварительному прогнозу по итогам встречи с РЖД, в 2025 г. в России может быть построено около 70 тыс. новых грузовых вагонов. В рамках договоренностей с госкомпанией вагоностроители и собственники подвижного состава сформируют детальный план для обеспечения своевременного выхода их на сеть с учетом имеющихся ограничений пропускной способности железнодорожной инфраструктуры и приоритетов перевозок. — Высок ли уровень диверсификации заводов? Есть ли возможность у вагоностроительных предприятий временно сменить профиль, если что-то пойдет не так? — Маловероятно. С учетом специфики оборудования одним из немногих вариантов является производство контейнеров и танк-контейнеров. И такие попытки уже были. Но в этом сегменте, к сожалению, мы абсолютно неконкурентоспособны с китайскими производителями, у которых в силу огромных объемов производства достаточно низкие цены, которые окупаются уже при первой отправке с импортными грузами в Россию. Хочу отметить и разность подходов к отечественной и импортной продукции: если к танк-контейнеру российского производства предъявляются требования по соответствию техническому регламенту Таможенного союза ТР ТС 032/2013, то для импортного контейнера такие требования не соблюдаются, и он поступает на российский рынок, как тара с грузом, и в дальнейшем здесь эксплуатируется. Мы уже обращали внимание регуляторов на эту проблему, сейчас идет рассмотрение вопросов о разделении кодов ТН ВЭД (товарная номенклатура внешнеэкономической деятельности Евразийского экономического союза) по группам контейнеров для возможности дальнейшего установления требований по проверке соответствия импортных контейнеров ТР ТС 032, чтобы уравнять ситуацию. Отсутствие необходимости подтверждения соответствия указанному техрегламенту для импортного контейнера также сильно уменьшает его себестоимость. В целом текущая ситуация не располагает к выпуску контейнеров в нашей стране: рынок перенасыщен, транспортно-логистические центры в Московском регионе перегружены, ящики некуда девать. Еще одна эфемерная альтернатива — выпуск комплектующих, однако объемы рынка сбыта здесь ограниченны. Так что будем оптимистами: надеемся, что РЖД справится со своими вызовами, увеличит пропускные мощности там, где необходимо, сеть поедет быстрее, и ограничения будут сняты. Со своей стороны мы готовы сотрудничать на всех возможных площадках и оказывать необходимое содействие коллегам. Евгений Семенов Родился в 1980 г. в Москве. В 2002 г. окончил Московский государственный университет путей сообщения по специальности Технология машиностроения. Обучался по президентской программе подготовки управленческих кадров для организаций народного хозяйства России. С 2002 г. по 2012 г. прошел путь от мастера до главного инженера на Люблинском литейно-механическом заводе. С 2012 г. по 2013 г. работал в должности заместителя главного инженера Вагонной ремонтной компании — 1 (ВРК-1), одной из крупнейших по ремонту грузовых вагонов. С 2013 г. по 2016 г. занимал должность начальника управления развития продукции вагоностроения Уралвагонзавода (Нижний Тагил, Свердловская обл.). С 2016 г. по настоящее время является исполнительным директором Союза Объединение вагоностроителей. Союз Объединение вагоностроителей Создан в 2001 г. Объединяет 28 организаций, среди которых ведущие отечественные вагоностроительные предприятия — лидеры на постсоветском пространстве, производители комплектующих и запасных частей к подвижному составу, а также организации ремонтного и научно-исследовательского комплекса. Константин Мозговой Вы можете присылать комментарии по адресу или запросить дополнительную информацию feedback@argusmedia.com Copyright © 2024. Группа Argus Media . Все права защищены.

Viewpoint: European HSFO supply to stay short

24/12/24

Viewpoint: European HSFO supply to stay short

London, 24 December (Argus) — A sustained reduction in global supply should keep European higher-sulphur fuel oil (HSFO) prices and margins elevated in 2025. European HSFO differentials against the front-month Ice Brent crude futures contract briefly moved to a premium in October 2024, when a fall in production coincided with strengthening demand for high-sulphur marine fuel. A fire at a crude distillation unit in September severely cut output at Motor Oil Hellas' 180,000 b/d Corinth refinery in Greece, a key HSFO bunker producer in the Mediterranean region. The possibility of sudden drops in output at refineries will underpin HSFO margins in 2025, assuming Europe maintains its ban on imports of Russian oil products. Europe imported sour fuel oil from a variety of other countries in 2024 — Iraq emerged as the largest single supplier of high-sulphur residual product, according to Kpler , accounting for about a third of the region's 5.7mn t of imports. Europe's HSFO stocks will come under indirect pressure next year from falling fuel oil output in Russia. Additional upgrading capacity at Russian refineries means output from the world's top fuel oil supplier has been dropping year-on-year. Vortexa data show nearly 37mn t of Russian fuel oil has arrived at non-Russian ports this year, 12pc lower than in 2023. Although Europe cannot take any of this, the fall means less to go around globally and this has a knock-on effect on European supply. If middle-distillate crack spreads stay relatively lacklustre in 2025, appetite for higher-sulphur straight run feedstocks will probably be subdued. This could allow for excess sour fuel oil to find its way into the marine fuels market, where demand for HSFO has been strong. Tankers opting to avoid the risk of being attacked by Yemen-based Houthi militants in the Red Sea are adding weeks to their journey times, and have been looking to HSFO rather than very-low sulphur fuel oil (VLSFO) to keep their bunker costs down. If longer shipping routes remain popular in 2025, demand for HSFO should stay strong. The Emissions Control Area (ECA) that will cover the Mediterranean Sea from 1 May 2025 could dampen buying interest for 3.5pc sulphur marine fuels. A sulphur scrubber can undergo more wear and tear if it is made to reduce a vessel's HSFO emission level to 0.1pc, in line with the ECA, rather than to the current limit of 0.5pc. This increases rates at which the scrubber needs to be replaced, making it uneconomical to install one. Mid-range sulphur fuel oils are now garnering interest from Mediterranean-based bunker buyers as a workaround. LSSR As the ECA comes into force, demand for the sweetest grades of low-sulphur straight-run (LSSR) fuel oil is likely to intensify from those who buy marine fuels for vessels not fitted with scrubbers. Demand for 0.1-0.2pc sulphur straight-run fuel oil has been high in 2024, reinforcing competition between blenders and refiners for Algerian LSSR. Exports of Algerian LSSR were 1.28mn t in the year to 20 December 2024, lower by 38pc from year-earlier levels and by 65pc from the same period in 2022, but global supply was somewhat balanced by output from Nigeria's new 650,000 b/d Dangote refinery. It exported 870,000t of LSSR in 2024, of a reportedly similar grade to the Algerian product according to data from Vortexa. Most Nigerian cargoes exported in 2024 were used for blending, according to information gathered by Argus . LSSR export availability from Dangote will depend on the refinery's ability to run feedstocks through residue fluid catalytic cracking units for gasoline production. Potentially adding to west African LSSR, at the start of December Nigeria's 210,000 b/d Port Harcourt refinery sold its first cargo since its long-awaited restart on 27 November. Port Harcourt's LSSR contains 0.26pc sulphur, according to Kpler. By Bob Wigin and Isabella Reimi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump-Panama tiff highlights rising transit cost

24/12/24

Trump-Panama tiff highlights rising transit cost

New York, 23 December (Argus) — US president-elect Donald Trump's threat on Saturday to reclaim the Panama Canal for the US put a spotlight on rising costs this year and additional fees planned by the Panama Canal Authority (ACP) for 2025 in the ongoing fallout of a 2023 drought in Central America. Trump claimed that the US is the "number one user" of the Panama Canal, with "over 70pc of all transits heading to, or from, US ports" on 21 December. ACP data for ships destined for or departing from the US puts this percentage at 73pc in 2023 and 75.5pc in 2024 based on total tonnage of commodities moved through the canal. "This complete ‘rip-off' of our Country will immediately stop…" Trump said. The base transit tolls at the Panama Canal have been on the rise and are largely in line with those at the Suez Canal, but Panama Canal costs can be much higher for vessel operators that compete in auctions to enter the Central American passageway. The operator of a medium range (MR) tanker traveling laden through the Panama Canal would pay $279,564.87 in transit fees, while the operator of a laden very large gas carrier (VLGC) would pay $505,268.24 without accounting for reservation costs, ACP estimates. Suez Canal fees have also been on the rise , with MR tanker at $274,001 throughout 2024, while a VLGC operator would pay $487,562. But after last year's drought caused the ACP to temporarily limit transits, ACP required shippers to book transit reservations. Shippers unable to secure reservations via pre-booking often resort to the transit slot auction, where winning bids vary wildly. Pre-booked transit slots often quickly sell out to the containership and LPG vessel owners that dominate the top spots on the ACP's client list. Auction prices for the Neopanamax locks, which have a starting bid of $100,000 and handle large vessels like VLGCs, are at about $220,000, per Argus assessments. Auction prices for the Panamax locks, which have a starting bid of $55,000 and handle vessels like MR tankers, are around $75,000. The highest Neopanamax auction price was nearly $4mn, with the highest Panamax auction price at about half that level. In December 2023, 30pc of Panamax lock tanker transits were reserved via the auction system , according to ACP. The president-elect's criticism of the ACP's handling of Panama Canal fees comes as the administrators of the waterway bounce back from a severe drought throughout 2023. Freshwater levels in the manmade Gatun Lake that helps to feed the canal have recovered because of the return of the rainy season this year, but ACP has maintained its requirement that shippers wishing to transit have reserved transit slots. Prior to the drought, ACP maintained a first-come, first-serve basis for vessels without reservations. ACP ups reservation costs, adds fees for 2025 Starting in 2025, ACP is maintaining the auction system while also increasing pre-booking costs and adding other fees. ACP will raise transit reservation fees from $41,000 to $50,000 for Panamax lock transits for "Super" category vessels, including MR tankers. Neopanamax lock transit reservation fees will climb from $80,000 to $100,000 on 1 January. ACP announced a third transit option in late 2024 for vessel operators in the form of the "Last Minute Transit Reservation" (LMTR) fee to start 1 January 2025 alongside other new fees and higher existing reservation fees. ACP set the cost of the LMTR fee at about twice the starting bid of an auction , or $100,000 for Supers and $200,000 for Neopanamax, and will likely offer the LMTR fee to vessels that fail to secure a transit slot at auction. Furthermore, vessel operators that cancel within two days of their transit will be charged a fee at 2.5 times the transit reservation fee, described by the ACP as a surcharge to the existing cancellation fee, which ranges up to 100pc of the transit reservation fee depending on how close to the transit date that an operator cancels. This means that a Super vessel that cancels within two days of its transit date will receive the 2.5 times surcharge on top of the 100pc transit reservation cancellation fee and pay a total of $175,000. A Neopanamax vessel will pay a total of $350,000. "Vessels of war" should also vie for slots: ACP Trump also suggested that the ACP was charging the US Navy, alongside US corporations, "exorbitant prices and rates of passage" and that these fees were "unfair and injudicious". In March 2024, the ACP published an update on transit slot assignments for vessels of war, auxiliary vessels and other "government-owned" vessels encouraging their operators to participate in the transit system rather than waiting for the ACP to assign them a slot. "Vessels of war, auxiliary vessels, and other government-owned vessels are encouraged to obtain a booking slot through the available booking mechanisms in order to have their transit date guaranteed and minimize the possibility of delays," the ACP said. The ACP points out that these vessels of war are entitled to "expeditious transits" based on the Treaty Concerning Permanent Neutrality and Operation of the Canal and are technically not required to obtain a reservation to be considered for transit. Panama president Jose Raul Mulino on Sunday rejected Trump's threat to retake the canal , which has been under full control of the Central American country since 1999. The canal's rates are established in a public and transparent manner, taking into account market conditions, Mulino said. "Every square meter of the Panama Canal and its adjacent area is Panama's and will continue to be," Mulino said. "The sovereignty and independence of our country are non-negotiable." By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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