Tuesday, July 5, 2016

Opening of Panama Canal Fails to Boost U.S.-Asia LPG Arb Trade

Panama Canal

The arbitrage for LPG cargoes from the United States to the Far East remained closed despite the opening of the Panama Canal, OPIS Asia staff reported.

Freight cost from the U.S. to the Far East is expected to fall after the widening of the Panama Canal as several vessels already passed or are in the midst of passing through the passage.

However, the arbitrage margins for spot cargoes through Panama are still negative even as CFR prices over August rise above $330/mt.

Furthermore, Mont Belvieu prices are expected to remain supported as a recent fire at Lonestar and an explosion at Mississippi could potentially cause some logistic delays.

As such, spot interests from the Far East for ex-U.S. LPG cargoes remained feeble, with most cargoes passing through the Panama Canal likely term cargoes.

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