10OCT2019 - NEWS - Panama 0.5pc sulphur fuel oil faces Brazil challenge

Most Brazilian refineries process low-sulphur crude and, in turn, produce low-sulphur fuel oil, while Panama must take the fuel from the US and places like Mexico, Colombia, Ecuador, Peru and Chile because it does not have a refinery.

Even imports from Japan have ramped up this year, according to data from oil analytics firm Vortexa.

Brazilian state-controlled Petrobras began publishing 0.5pc sulphur fuel oil for bunkering prices in all the major ports in Brazil on 1 October. Argus launched 0.5pc sulphur fuel oil assessments based on supplier and blender feedback in Panama in mid-June, and Petrobras' prices have been lower than Panama's.

Yesterday, the 0.5pc sulphur fuel oil discount at Santos, Brazil, to Panama was $120/t, while the Rio de Janeiro discount was $105/t.

A discount of more than $100/t could prompt some shipowners to divert from Panama to Brazil to bunker there. Whether Santos and Rio de Janeiro increase their shares of the 2020 South American Atlantic coast bunkering market by taking some of Panama's traffic depends on if the discount to Panama remains.