Panama MGO sales up but VLSFO demand dominates

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

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

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

By comparison, in the US suppliers estimate VLSFO at 57-62pc of total marine fuel demand, HSFO at 5pc and MGO at 33-38pc. Data from the port authority of Singapore, the biggest bunkering port in the world, showed VSFO, HSFO and MGO sales at 71pc, 19pc, and 10pc 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 0.5pc from 3.5pc. Starting this year, high-sulphur resid is only sold to vessels outfitted which 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 65pc — are sourced from the US Gulf coast. Panama also imported diesel from Canada, China, Ecuador, South Korea and Russia among others.

By Stefka Wechsler