Extensive delays at the drought-stricken Panama Canal have added further pressure to Chilean sulphuric acid demand as vessels face delays, which is prompting a moderate bullish sentiment in the market.
Chilean acid buyers have seen their cargoes delayed for up to a month, which coupled with the imminent start of the heavy swell period at the key discharge port in Mejillones has added further pressure to ensure adequate stock levels for the next few months.
Vessel owners are reportedly reluctant to sail to Chile from Europe or seek alternative costly and time-consuming routes to circumvent the Panama Canal, such as passing through the Magellan strait, which adds around 10 days of sailing time to the voyage from Europe and increases freight costs.
Chilean sulphuric acid importers are expected to increasingly look to Asia to secure spot cargoes for arrival in 2024 as the drought conditions at the Panama Canal are likely to last for several months, until the next wet season — which starts around the middle of next year.
Waiting times to cross the canal were around 15-20 days and the Panama Canal Authority recently warned that vessels without a reservation may face "indefinite delays".
Freight rates from northwest Europe to Chile were last assessed in the $90-105/t range for an 18,000-30,000t acid cargo, but pressure is increasing with new quotes heard at the higher end of the range, into the three-digits, owing to the risks of delays.
