Page 5 - LatAmOil Week 34
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LatAmOil COMMENTARY LatAmOil
“The two historic milestones this week – our In May, a total of 937 ships transited the
10,000th Neopanamax transit and 106th anni- canal, while a further 260 transits were can-
versary – are symbolic,” stated Panama Canal celled according to Vasquez – a 21% decline on
administrator Ricaurte Vasquez. “Together, expected numbers. Nearly half of the cancella-
they reiterate that the Panama Canal is not tions came from LNG and LPG tankers, and the
only a trusted and reliable service, but also one Panama Canal Authority also reported a loss
committed to continued competitiveness and of cruise ship traffic that normally peaks in the “
growth.” spring. The Panama
Taking a hit What next? Canal Authority
Despite the role the Panama Canal plays, traffic Transits through the Panama Canal are now on is trying to
on the waterway had already taken a hit prior the up, however, as global trade rebounds from
to the coronavirus (COVID-19) pandemic as the worst of the global lockdowns. In June, total encourage the
a result of the trade war between the US and transits through the waterway had fallen to 845 –
China. In 2019, China’s imports from the US the lowest level since the expanded canal opened rebound in
dropped by 20.9% year on year to $122.7bn. – but in July, transits rose to 933 in July.
LNG was among the segments hit, with no The Panama Canal Authority is trying to transit and trade
US exports of the fuel to China at all between encourage this rebound. It announced recently
March 2019 and February 2020. However, fol- that it had decided to increase the maximum
lowing a preliminary trade deal agreed between authorised draft for the transit of the Neopana-
the two countries in January 2020, China started max locks by 1 foot (0.3 metres) to 48 feet (14.6
granting tariff waivers to some of its LNG metres).
importers for cargoes from the US as the coun- It noted, however, that the draft was depend-
try worked to meet its target for importing more ent on water levels in Gatun Lake, and that ves-
US energy. sels may be required to offload some of their
These efforts to boost US-China trade were cargo or take other measures to decrease their
hampered by the Asian country’s lockdown in draft to transit the locks.
response to COVID-19, though, and China Speaking to Bloomberg this week, Panama
remains significantly behind its target for ramp- Canal Authority deputy administrator Ilya
ing up US energy purchases. But despite doubts Espino de Marotta warned that LNG and cruise
over the trade deal’s ability to survive an upcom- ship transits may be slower to rebound than
ing review, the SK Resolute’s current journey other types of traffic, such as container ships.
shows that US LNG trade with China continues Indeed, it has been a slow summer for US
for now. LNG, and a number of contracted cargoes have
More recently, as other countries brought in been cancelled. But these are now recovering,
their own lockdowns in an effort to contain the which is likely to translate into higher LNG
spread of COVID-19, traffic through the Pan- tanker traffic through the Panama Canal in the
ama Canal took a further hit. coming weeks.
Map of the Panama Canal (Image: OpenStreetMap and contributors)
Week 34 27•August•2020 www. NEWSBASE .com P5