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Harvey brings uncertainty to bunker prices in Houston, Panama

Bunker suppliers and traders active in Houston and Panama said Tropical Storm Harvey is creating uncertainty for prices because participants don’t know how long shipping operations will be affected.

“The Gulf is a big source for Panama and Latin America so it’s important,” one source at a major shipping line said. “It depends on how long things are offline. If it’s longer than a week I would expect a medium-term price increase.”

Harvey made landfall at Corpus Christi, Texas, as a Category 4 hurricane late last week before weakening to a tropical storm, according to the US National Hurricane Center. In addition to closing the Houston Ship Channel, the storm system devastated structures along the Texas coast and brought unprecedented flooding to areas including Houston, the fourth largest city in the US.

Some suppliers and traders active in Houston reached by S&P Global Platts on Monday indicated IFO 380 CST prices between $295-$300/mt ex-wharf and marine gasoil at $495-$505/mt delivered. Houston MGO on August 24 was assessed at $292/mt ex-wharf, and MGO was assessed at $485/mt ex-wharf.

The estimated earliest delivery for those products was September 2-6, those sources said. Another supplier indicated Houston MGO at $530/mt delivered without providing a delivery date.

Other suppliers said it was impossible to provide pricing or the earliest possible delivery due to the uncertainty of when the US Coast Guard will lift the Zulu port condition, which halts all vessel traffic.

One Houston supplier said ships were starting to divert and cancel port calls, which they said could help alleviate scheduling conflicts and any backlog of ships waiting for bunker deliveries. A different Houston supplier said only one ship had been waiting since August 24, and that by Thursday they expected to have about three to four vessels waiting.

In New Orleans, one supplier said they didn’t expect to see any impact from Harvey on bunker prices unless more rain moves to the west than anticipated.

“We’re as busy as ever on the river,” the source said. “The river is normal for us.”

A separate trader active in the region said that while there were no problems with availability or barge congestion yet, it was “only a matter of time” before they materialized.

Traders on Monday indicated New Orleans IFO 380 prices at $297-$312/mt ex-wharf and MGO at $470-$485/mt ex-wharf. On August 24, New Orleans IFO 380 was assessed at $301/mt ex-wharf and MGO was assessed at $475/mt ex-wharf.

In Balboa, Panama, the biggest market for bunker fuel in Latin America, one trader with business there said that Harvey will “eventually” affect prices. “We don’t know how long it’s going to take before the situation can be resolved,” the trader said.

The bulk fuel oil market has also experienced shutdowns that have halted operations.

Both the HOFTI and BOSTCO terminals, which are two of the largest fuel oil terminals on the US Gulf Coast, declared force majeure over the weekend due to the storms and flooding. One source said terminals in Galveston were also shut, meaning no loading and unloading of fuel oil. One USGC supplier said they were planning on declaring force majeure on their planned deliveries of fuel oil due to the closures.

A letter from Kinder Morgan Gulf Commercial Director Clay Jeffirs to customers released Sunday said the BOSTCO terminal would not reopen until it is determined to be safe by “respective government agencies and Kinder Morgan management.”
Source: Platts

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