Reduction in Neopanamax Vessel Capacity
Effective November 1st, the capacity for Neopanamax vessels will be reduced as follows:
- Nov. 3-6: 8 vessels per day
- Nov. 8-14: 7 vessels per day
- Nov. 15-30: 7 vessels per day
- Dec. 1-31: 6 vessels per day
- Jan. 1-31: 5 vessels per day
From February 1st onwards, the Neopanamax vessel capacity will be further reduced to 5 vessels per day until further notice, as stated by the ACP.
Impact on Liquefied Petroleum Gas (LPG) Transport
Market sources indicate that the transport of liquefied petroleum gas (LPG) is likely to be affected by these changes. The Neopanamax locks are typically used by very large gas carriers (VLGCs) that ship LPG.
Market Reaction and Uncertainty
In response to the ACP announcement, some market participants rushed to secure their paper positions. The spread between the December and January Far East quotes reached a high of $30/mt on October 31st, up from $4/mt the previous day, according to LPG paper brokers.
While some expect the volatility to persist in the short term until the market adapts to the new arrangements, it remains uncertain when bullish spread trades will cool off.
Drought Conditions at the Panama Canal
The ACP note also reveals that 2023 has been described as the second driest period the Panama Canal has experienced since 1950.