The potential closure of US independent Valero's 145,000 b/d refinery in Benicia, California, this spring is expected to boost asphalt trade flows and prices as buyers seek supply from farther afield.
Valero in April 2025 said it planned to close or repurpose Benecia by April 2026. The plant produces roughly 400,000 short tons/yr of asphalt, according to market participants, accounting for about 35pc of total asphalt production capacity in the state. Benecia is the only local source of supply for the northern California market. The next closest producer is near Bakersfield in central California, about 280 miles from the San Francisco market.
Bay Area retail asphalt prices are expected to rise as buyers shift to delivered rail volumes from the Rocky Mountains or Canada to make up for the shortage. Other North American rail markets could also see upward price pressure, with more volume directed to the US west coast.
Bay Area rack prices averaged roughly a $200/st premium to rail values in the Rockies during 2025 and this week have been in the $470-$510/st range. A supply disruption could push prices rapidly higher.
The last major disruption out west was in March 2022, when a fire damaged the 58,000 b/d Billings, Montana, refinery, which at the time was owned by ExxonMobil. Wholesale rail values in the Rockies rose to a 14-year high of $612.50/st in July 2022, a 39pc increase from March of that year.
Asphalt production capacity in California totals 25,950 b/d or about 4,600 st/d , 15pc below 2020 levels and nearly 50pc below 2015 levels, according to US Energy Information Administration data. US west coast receipts of Rockies asphalt rail shipments totaled about 1.97mn bl or 351,785st through September 2025, 33pc above flows during the same period in 2015.
Canadian rail volumes destined for the US west coast have also been on the rise recently. About 61,000 bl or 10,892st of Canadian asphalt landed on the US west coast in September, 9pc above September 2022 flows and the highest level for the month since 2018.
Asphalt goes west
The pending loss of production has spurred several companies to enter the wholesale asphalt market to fill the supply gap.
Construction firm Teichert is developing a new terminal in West Sacramento, California, after purchasing a former fertilizer facility with rail and waterborne access. The facility has access to a deepwater shipping channel, and market participants have noted the possibility of waterborne imports if the economics are favorable.
The most recent US west coast waterborne import was in August 2024 when a ship carrying Venezuelan asphalt landed in Portland, Oregon, according to Kpler data. Some market participants said California has never received a waterborne asphalt import.
Asphalt terminal operator Ergon and San Joaquin Refining in August announced they had started discussions for a potential strategic partnership, and other suppliers have been heard looking at building tanks in or near California to supply the market.
Valero also operates an asphalt terminal with rail access, a truck rack and storage capacity of about 300,000 bl in Pittsburg, California, and some market participants have noted the potential expansion of the site could boost rail flows into the terminal as well.
Further south, Marathon Petroleum plans to produce asphalt and construct a truck-loading rack at its 365,000 b/d Los Angeles refinery in Carson, California, according to a project overview released by the company.
An increase in asphalt production would likely not be seen immediately, however. Market participants expect Marathon's project to take roughly two years to complete because of the lack of existing asphalt infrastructure at the refinery and California's strict regulatory environment, and that additional source of supply would still be nearly 400 miles from San Francisco.
