New York (Platts)--17Feb2011/842 am EST/1342 GMT

There were four-to-five times the normal volume of ships waiting to transit the Panama Canal early Thursday, and demand was so strong that transit slots were being auctioned to vessels that did not want to wait in line, market sources said.

"There's more than 80 vessels looking to transit and they're auctioning transit slots," said one bunker trader.

Gateway Agencies in Panama confirmed via a broker that 83 vessels were on queue for transit on Thursday, and the projected wait to begin transit was 24 hours.

On a normal day, there are 10-20 ship looking to transit.

The backup was attributed to seasonal grain shipments. "It's happening because bulker season has kicked off," said the bunker trader, referring to the bulk dry cargo tankers that move grain.

"It's grain season," confirmed a trader for a refiner based in the US that supplies bunker fuel to Panama.

"Around winter time the grain season starts in Panama and lots of the regional imports are discharged in Balboa," said the refiner source, referring to grain coming from other countries in South America.

Balboa and Cristobal are the ports on either side of the Panama Canal.

Two so-called "auction booking slots" were reported awarded, said the refiner source. "Both were for northbound Panamaxes; one was a full container vessel at a premium of $41,600, and another was a dry bulk carrier at a premium of $35,000."

The premiums are paid on top of normal transit fees and puts the vessels at the top of the queue.

As of Thursday morning, bunker values were flat at $596-597/mtw and no major value changes were expected.

"Demand is robust, but there's enough to go around so I wouldn't expect prices to change due to competition on vessels," the refiner source said.

--Bristol Voss, bristol_voss@platts.com

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