New YorkA few US Midwest suppliers stated that most of the paving work for the 2005 asphalt season is already on the books. Suppliers now appear to be positioning themselves for work that will pave later in the year or even into next year.
CHS announced on 13 July that it will invest $325mn in its 55,000 b/d Laurel, Montana refinery to build a coker and make other process modifications to the refinery.
The Connecticut Department of Revenue sent out a letter to asphalt marketers outlining a gross receipts tax increase on petroleum products.
Patriot Asphalt to start marketing asphalt at some US southeast rail terminal locations.
A southern Alabama supplier reported that it would start selling asphalt from its southern Alabama asphalt truck rack on 18 July.
The Edmonton Independent Gravel Haulers Association strike could be resolved by early this week. The association was asking for a 30pc hike in haul rates.
East
coast commentary
New
England
buyers reported that wholesale PG 64-28 was landing in the region at around
$195-210 delivered. One marketer stated that this price was for volumes sourced
from local refiners and export sources.
Retail liftings are lower than expectations for East coast marketers due to rainfall. However, prices were reported to be relatively stable to higher.
A Portland, Maine supplier raised its price for PG 64-28 by $10 to $225 fob.
A New England supplier informed its customers that it would be raising its retail prices for PG 64-28 by $10/st on 18 July. With this increase, the supplier’s new price range in the Boston, Massachusetts would be $228-235 fob. Additionally, the supplier’s southern Connecticut prices would move to the $225-232/st fob range for PG 64-28, exclusive of the gross receipts tax.
New England marketers are warning their customers that another price increase may be announced for early August. Marketers commented that they are simply trying to keep up with wholesale price increases. No specific dollar amount was announced.
The Connecticut Department of Revenue sent out a letter to asphalt marketers outlining a gross receipts tax increase on petroleum products. With this increase, the gross receipts tax in Connecticut moved to 5.8pc from 5.25pc, effective 1 July, 2005. On 1 July, 2006, the tax will increase to 6.3pc. On 1 July, 2007 and 2008, the tax will increase even more to 7pc and 7.5pc respectively.
A western New York supplier was quoting $200 not-to-exceed for PG 64-22 volumes. PG 64-28 was priced at $225-245 fob, depending on the amount of additive required.
One East coast refiner reported no changes in its retail prices from the $220-225 fob range for PG 64-22. The supplier stated that this price applied to its terminals in New Jersey, eastern Pennsylvania and Maryland. Long Island prices were heard at the $230-235 fob range for PG 64-22.
A western Pennsylvania supplier was quoting prices at $195 fob. The supplier stated that it had taken minimal work at this new price level.
A Virginia supplier raised its prices to the $225 fob level. A Carolinas supplier reported a price of $225 fob at its rail terminal locations.
One supplier reported raising its price to the $225 fob level at all terminal locations from New York to Florida. The supplier commented that the Atlanta market remained unchanged with its price range at $185-200 on a fob basis.
One marketer commented that cheaper prices from Chattanooga for delivery into Atlanta were keeping Atlanta prices from moving up in line with other surrounding states. Volumes from Chattanooga for delivery into Atlanta were heard at $175 not-to-exceed prices for the rest of the year.
A new supplier in the Atlanta market reported an opening price of $220 fob for PG 67-22. A Savannah, Georgia supplier raised its prices by $20 to $225 fob.
Jacksonville, Florida prices were reported to be at $200-215, according to one local player. Another marketer reported its price at $215 fob. The supplier admitted that it currently had no inventory at Jacksonville, but was in the process of obtaining supply. A third Jacksonville supplier stated that it as at the $217 fob level, and was unable to sell any volume.
The Tampa, Florida price was heard at $195-200, according to one local player. Another player called the price $199 fob, and stated that the majority of its volume was at the $199 number. A third supplier stated that it was offering Tampa volumes at a higher $220 fob level, but was unable to sell any volumes due to lower prices from its competitors.
Eastern Florida prices were heard at $220 fob. Southern Florida prices were heard at $235 fob from two local suppliers.
Gulf
coast commentary
Gulf
coast refiners reported receiving several inquiries from buyers for wholesale
asphalt supply. One eastern Gulf coast supplier was reported to be quoting prices
at the $170 fob level for PG 67-22 and PG 64-22. There were no deals done at
this level by the end of last week.
Another eastern Gulf coast supplier quoted $180 fob for PG 70-22, with no completed transactions by the end of last week.
Quotes heard from the western Gulf coast were in the mid-$160s at a minimum for PG 64-22, according to sources. One western Gulf coast refiner has had no wholesale asphalt to supply into the open market, as it was using its asphalt production to meet the needs of its own terminal system.
Retail liftings for asphalt were down in some Gulf coast states due to scattered thunderstorms. However, local marketers reported that liftings were on track with expectations for this year.
There were some retail price increases seen in the Gulf coast. In Alabama, one supplier raised its prices on 11 July in the central and northern section of the state to $200 fob for PG 67-22. This price increase would affect all current liftings, aside from those that were tied to the state index. One marketer opined that the price for volumes related to the index would change with the index next month. PG 76-22 in Alabama was reported to have a $90 premium over PG 67-22.
A southern Alabama supplier reported that it would open its Mobil asphalt truck rack on 18 July, with an opening price of $235 fob for PG 67-22.
A southern Alabama refinery had to temporarily shut down its refinery ahead of the arrival of Hurricane Dennis. There was no operational damage and the refiner expected to be back up and running early this week.
In southern Mississippi, prices remained stable at the $185 fob level for PG 67-22. One local supplier reported feeling tremendous pressure to raise retail prices due to crude oil price strength. One supplier reported that its PG 76-22 prices were at $275 fob.
Southern Louisiana prices were at $190 fob, according to one local source. Volumes moving from southern Louisiana into southern Mississippi were priced at $185 fob.
The southern Texas market was at $210-225 fob for PG 64-22. Quotes at the last Texas letting showed on supplier quoting a fixed guaranteed price of $250 fob for PG 64-22 volumes that would move through 2006. The supplier offered $30 price escalators/year for volumes that would lift from 1 January, 2007 onwards.
Midwest
commentary
The
Midwest wholesale price range narrowed from $130-165 fob to $140-165 fob last
week. One supplier that was offering the $130 fob wholesale prices was reported
to have raised its price to $140 fob by early last week.
One refiner was quoting August wholesale volumes at $170 fob, and already had some commitments on the books. These volumes were available by truck, barge and by rail. Wholesale quantities of PG 58-28 were carrying a $15-30 premium over PG 64-22.
Midwest refiners have been receiving several calls from West coast and Rocky Mountain buyers seeking wholesale asphalt. These players are looking for supply availability over the September/October time-frame.
With crude prices remaining strong, and light to heavy crude differentials narrowing, some Midwest refiners are looking at lightening up their crude slates. One marketer stated that it might switch to a lighter slate sometime in early fall.
A few Midwest suppliers stated that most of the paving work for the 2005 asphalt season is already on the books. Suppliers now appear to be positioning themselves for work that will pave later or even into next year. One supplier pointed out that it was quoting future prices at $20-30 higher numbers than current prices. The supplier opined that it was uncertain if any of it would be able to sell any volumes at these higher prices because of the high level of commitments in the market for the current year.
With retail prices remaining relatively stagnant, wholesale asphalt buyers/resellers are finding their distribution margins squeezed (the difference between their rack and wholesale prices).
One Minneapolis/St. Paul, Minnesota supplier stated that its prices were at $180 fob for current quotes. The supplier reported that it was higher than its competition in this market. Another marketer felt that the current prices in Minneapolis/St. Paul were at $170 fob for sales of PG 58-28.
Wisconsin and North Dakota prices were heard at $190 fob. One North Dakota supplier was believed to be at around the $180 fob price level.
One marketer commented that about 80pc of the work in North Dakota and Northwest Minnesota has already been bid for the Year 2005. One marketer stated that most of the contractors have already signed up work at prices ranging from $145-150 on the low end to prices as high as $165-175 fob.
A northern Wisconsin supplier was offering asphalt at $180 fob its refinery. The supplier stated that it has signed up some work at prices as high as $190 fob. The supplier stated that it was not willing to chase prices in the $170s.
Quotes in Detroit, Michigan were at $185 fob. One supplier reported taking some PG 64-22 volume at that price level.
Northern Indiana prices were at $175 not-to-exceed. One supplier stated that it had not yet taken any work at this level. Indianapolis, Indiana was heard at $185 not-to-exceed. Central Illinois prices were at $185 or $190 fob, depending on the location.
Northern Ohio prices were reported to be at $200 fob. A southern Ohio supplier was at $180 fob for future work.
Eastern Kentucky prices were at $185-190 fob, while western Kentucky prices were at $180-185 fob. One western Kentucky marketer stated that it was signing up some work at the $185 fob level.
A Tennessee marketer stated that its prices in Chattanooga were at $195 fob. The supplier stated that its prices were too high for it to compete in the Atlanta, Georgia market. Central Tennessee prices were heard at $190 fob, with some numbers down to mid-$185.
Rocky
Mountain & west coast commentary
West
coast and Rocky Mountain buyers were seeking wholesale asphalt from Midwest
refiners. These buyers were looking for supply availability over the
September/October time-frame. Rocky Mountain suppliers are expected to have
less wholesale to offer during this time period, as they focus on meeting their
retail obligations during these peak paving months in this region.
With crude prices remaining strong, and light to heavy crude differentials narrowing, some Rocky Mountain refiners are looking at lightening up their crude slates. One refiner commented that resid margins were lagging behind lighter petroleum products, thereby providing an incentive to switch to lighter crudes.
Wholesale prices were reported to be mostly in the $120-125 fob range for PG 64-22. One supplier pointed out that there was not much new volume availability at this price range.
CHS announced on 13 July that it would be investing $325mn in its 55,000 b/d Laurel, Montana refinery to build a coker and make other process modifications to the refinery. Construction is expected to begin in early 2006, with a tentative completion of 31 August, 2008.
Western Washington retail prices were holding in the $185-190 fob range. In eastern Washington prices were slightly weaker at $180-185 fob.
Oregon retail prices were unchanged from the $185 fob number. Contractors have quoted prices at this level for the entire year, making it impossible to raise prices despite market circumstances.
Northern California rack prices were reported to be unchanged at the $195 fob level. One supplier stated that high refinery production costs were putting tremendous pressure to raise prices. Asphalt sales were good in southern California.
Southern California prices were heard in the $200-210 fob range day-to-day liftings. Any prices below $200 were reported to be older commitments that were on the books.
At the last bid California letting, quotes on a southern California job that will bid paving next year were heard in the $205-270/st range index-related. The state index was at $271.90. The job was to pave in the second quarter of next year, and had over 7,000st of grade AR-4000.
A southern California marketer had some minor problems with its loading racks, which temporarily disrupted loading activity. The supplier reported being operational within the same day.
California marketers are optimistic about demand for the remainder of the year. With the state budget approved, marketers are expecting highway funding levels for fiscal year 2005-06 to be restored.
Canada
commentary
Continued strength in crude oil prices and strong wholesale asphalt prices put
pressure on eastern Canadian retail prices. Quebec marketers felt the pressure
to raise prices the most, as prices in this market softened to the C$245-250
fob level last week for PG 58-28, due to stiff competition at the 27 June
Ministry of Quebec provincial tender.
On 15 July, one Quebec marketer sent out a letter to all its customers informing them of a C$30/t price increase for all PG grades, with a C$50/t increase for PG 58-34. With this increase, the supplier’s PG 58-28 price went to C$275-280. The supplier stated that with these price changes, PG 58-34 now had a C$60 premium over PG 58-28, and PG 64-34 had a C$120 premium over PG 58-28.
On 15 July, another Quebec supplier raised its rack prices by C$30 for both PG 58-28 and PG 64-28, taking its posted prices to C$285 and C$307, respectively. The supplier also raised its PG 58-34 posted price by C$38 to C$345, and its PG 64-34 posted price by C$35 to C$405.
One Quebec participant commented that even with these price retail increases, PG 58-28 retail prices in Quebec are still lower import parity prices from the US Midwest market. Hence, the marketer believed that further price increases may be necessary in order to keep up with rising Midwest wholesale values.
The Toronto, Ontario market was relatively stable last week at the C$265-275 fob range for PG 58-28. One local supplier has notified its customers to expect a price increase of C$15-25 on 1 August.
There were no rack price changes in western Canada, since the last changes in late June. However, one local marketer commented that continued strength in WTI prices and the continued tightening in the light-heavy differential in July and August could put pressure on rack postings. The Edmonton rack posting was reported to be at C$296, Vancouver at C$336, Kamloops at C$345, and Winnipeg at C$336.
In British Columbia, work in the Thompson Okanagan was reported to be going for C$320-335/t fob eastern British Columbia. In the rest of the province, volumes moving were at C$280/t fob the closest Alberta supplier. The British Columbia market was described as stable.
Last work taken in Alberta was reported to be at the C$290 fob level, with other bids heard at prices that were $5-10 higher. One marketer reported that there was pressure on these prices to move up.
Last prices heard in Saskatchewan were at the C$290 fob level for Pen 150-200. One marketer opined that prices were stable for larger sized jobs, with higher prices for small jobs.
In Saskatchewan, prices for high float non-modified emulsions sealing grade, HF150S, was reported to be in the C$280-305/t range on a fob basis. One local supplier commented that these prices are similar to last year’s level.
Saskatchewan marketer complained that volumes are down in the province by 8-10pc due to lower government funding levels.
In Manitoba, 90pc of the work for this year has already been bid. Tendering activity has been slim in July, and local marketers are focussed on meeting their contractual obligations. Sporadic rainfall slowed down liftings in areas.
One Manitoba supplier reported the last range of prices for successful bids in June to be at C$270-290/t for Pen 150-200, while another reported the range as C$275-290 fob the closest. One marketer commented that based on current costs, Manitoba should be closer to the C$310-315 fob level for Pen 150-200. However, stiff competition among local participants has kept prices lower.
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