East coast
Exceptionally warm temperatures in the east coast kept the wholesale and the retail market relatively active for this time of the year.
The US East coast wholesale market was extremely stable last week. A refiner reported that its last wholesale sale was at $230 fob for PG 64-22. A wholesale buyer stated that its last wholesale transaction from an export source was at $240 delivered. The last wholesale parcel that moved from the Gulf coast to the midwest was also at $240 delivered. Wholesale flux prices from one export source were at $240-245 delivered.
Retail sales were strong last week as the very warm temperatures supported asphalt liftings. One refiner stated that it was shipping double its planned volumes for December, which was entirely a result of the mild weather conditions.
In the New England area, year-end asphalt price were at $370-375 fob for PG 64-28, exclusive of the gross receipts tax. In eastern New York, prices were at $290 fob for PG 64-22.
In the New York City area, prices were at $285 for PG 64-22, while in northern New Jersey prices were at $285 as well. In southern New Jersey prices slipped by $5 on the low end to $275-280 fob. Baltimore, Maryland, prices were softer as well with prices heard at $280-285 fob for PG 64-22.
In Virginia, asphalt prices were at $285-295 across the state, representing a $10 drop at the lower end of the price range. Bristol, Virginia, prices moved down from $310 fob for $300 fob.
In coastal North Carolina, prices were at $310 fob, as were the inland Carolinas markets. Atlanta, Georgia, prices were holding at $315 fob for PG 64-22, while Savannah prices were at $290-300.
In Tampa, Florida prices were at $297-300 fob, unchanged from the week before. Southern Florida prices had a wide range, with prices heard at $305-325 fob.
Gulf coast
Gulf coast wholesale asphalt prices were relatively stable last week as refiners attempted to move out their last few wholesale deals before the year comes to a close.
An eastern Gulf coast refiner reported selling a total of 65,000 bl of asphalt consisting of 55,000 bl of PG 67-22 and 10,000 bl of PG 52-28. The PG 67-22 volumes were sold at $210 delivered or a fob equivalent price of around $200. This volume was for early January delivery to a Gulf coast state. The PG 52-28 volumes were sold at $227 delivered or a fob equivalent price of $210. The PG 52-28 volume will be delivered in December to a Gulf coast state. Typically, PG 52-28 carries a $10-15 premium over PG 67-22.
One Gulf coast refiner stated that it was sold out for December and did not expect to have any additional sales until January of next year. One refiner stated that it was watching crude oil prices and refinery economics to determine what its wholesale quotes would be in January.
With Lifo accounting behind them, asphalt-producing refiners will enter the New Year keenly watching crude pricing and refining economics. One marketer pointed out that refiners have been selling wholesale asphalt in December at prices that were at or even below the breakeven costs. But this is not expected to continue into the New Year.
Gulf coast refiners pointed out that warm, relatively dry weather in the US southeast resulted in an increase in buyer interest and more prompt barge movements to the region. Wholesale buyers in the southeast and along the Ohio River were reported to still have some spare inventory capacity that will need to be filled with winter-fill volumes in the first few months of 2007.
The Gulf coast retail market showed little sign of change. In Alabama, PG 67-22 in the northern and central regions of the state were at $350 fob for PG 67-22. In southern Alabama, prices were heard at the $350-360 fob level for PG 67-22.
In central and southern Mississippi, asphalt prices were at $335-350 fob, while southern Louisiana prices were at $335 fob for PG 67-22.
Southern Texas prices, from Houston to Corpus Christi, were at $275 fob for PG 64-22, while inland Texas locations were at $275-290 fob for PG 64-22.
Midwest
The midwest wholesale price range was at $177-200 fob for PG 64-22, according to local sources. One marketer stated that most of the volume was towards the lower end of the range.
There were very limited wholesale quotes for January lifting heard from the midwest. But at least one supplier quoted January wholesale prices to one or more buyers. The supplier’s quotes for PG 64-22 were in the mid-$180s, or around $8-10 higher than its prices in December 2006.
One buyer confirmed that it was quoted January wholesale prices from a local supplier, but iterated that it had not completed any deal by the end of last week.
One wholesale asphalt supplier stated that it had a wide range of prices for wholesale deliveries. The refiner stated that it did not have any new asphalt to sell in December, but was moving committed volumes on older deals.
One marketer observed that wholesale buyers still have tankage capacity to fill. The marketer pointed out that buyers appear to be waiting for suppliers to produce more volumes. But the economics for making asphalt are changing, as crude prices firm and light-heavy crude price spreads narrow. The cost of producing asphalt is rising, and in January, suppliers will no longer feel the pressure to move asphalt out for Lifo year-end accounting purposes.
Cooler weather conditions in the midwest continued to slow down asphalt movements. Retail prices were relatively stable in the region. But, marketers stated that their current prices were coming under pressure as crude prices strengthened and light-heavy spreads for January narrowed.
In the Chicago, Illinois, market, retail prices were at $325-340 for PG 64-22. Current quotes for 2007 were heard at $365 fob. In St. Louis, Missouri, prices were reported to have dropped by $10-25 from $300-315 fob to $290 fob. One supplier stated that it moved to this level as some of its competitors were offering these prices to select customers in the region.
Grand Island, Nebraska, prices were at $380 fob for PG 64-22. In Detroit, Michigan, last prices for PG 64-22 were heard at $360 fob.
In northern Ohio, last retail prices were at $340-350 fob for PG 64-22, while in the CInicnnati, Ohio, market prices were at $295 fob for PG 64-22.
In Memphis, Tennessee, prices were at $340, while Chattanooga, Tennessee, prices were holding at $310 fob level for PG 64-22.
Rocky Mountain & west coast
Rocky Mountain wholesale asphalt prices were unchanged from the $180-210 fob range for PG 64-22 and PG 58-28. Rocky Mountain refiners stated that they were meeting their wholesale contractual obligations for December to their historical wholesale asphalt buyers.
Asphalt was reported to be available from the Canadian Rockies. One western Canadian refiner was selling wholesale asphalt within Canada at prices that were equivalent to the US Rocky Mountain region (see Canada section).
Wholesale asphalt suppliers continued to be reluctant to quote wholesale prices for next year. One refiner stated that quotes would be highly dependent on crude prices and the spread between light-heavy crudes. Preliminary quotes for January that were seen in the midwest region showed higher wholesale prices for early 2007 (see midwest section).
Asphalt liftings were slow in the Rocky Mountain region because of cold weather conditions. In some west coast states, demand continued to be strong for this time of the year.
At the last Wyoming letting, one local supplier bid the work in the low $300s on a fob basis. Other quotes at the letting were around the $370-380 fob level. Quotes for next year’s work were heard mostly in the $350-380 fob range for PG 58-28.
Utah prices were stable at $390 for AC-10, while Las Vegas, Nevada, prices slipped from $390 fob for AC-30 to $360 fob.
Boise, Idaho, prices were holding at $425 fob for PG 64-22.
In Oregon, December prices for PG 64-22 were at $330-335 fob, unchanged from last week. Liftings were strong in December, but overall liftings for the year were about the same as 2005. One Oregon supplier stated that its posted price for PG 64-22 would remain at $350 fob for 1 January. This was the same posted price as December.
The northern California market was holding at around $315 fob for PG 64-16 and PG 70-10. Liftings were reported to be slowing down due to rainfall. The southern California market had a range of prices. One supplier reported that prices were at $300-305, and possibly even $295 fob, for PG 64-10. PG 70-10 prices were reported to be around the $320-330 fob level. One local participant stated that that the high asphalt pries in the southern California market in the summer of 2006 may have been responsible for the lower prices today. The supplier felt that prices had to be dropped dramatically to increase sales and stay competitive.
Canada
The eastern Canadian market saw warm weather for this time of the year, which allowed for higher liftings compared with individual company demand projections. The market was reported to be brisker in Toronto than in Montreal.
The Montreal, Quebec, market was unchanged with prices reported to be at C$270-275 fob for PG 58-28. PG 58-34 had a C$40 premium over PG 58-28, while PG 64-34 had a $110 premium over PG 58-28. One supplier pointed out that these premiums were wider in summer 2006, which could occur again in the next paving season, especially if demand is strong.
Toronto, Ontario, prices were reported to be in the C$385-390 fob range for PG 58-28, according to one Ontario participant. Another player stated that the range was wider, with some numbers as high as C$400, and some other volumes in the C$370s on a fob basis. PG 64-28 was reported to have a C$30 premium over PG 58-28.
The Ministry of Transportation of Ontario has decided to postpone its decision to not use asphalt modified by polyphoric acid on provincial roads to the first quarter of 2007. The ministry claims that it causes problems on specific jobs such as the stripping of aggregates from the asphalt.
A fire at Imperial Oil’s non-asphalt producing Sarnia refinery started at 3:00pm EST on 14 December in the refinery’s hydrocracker unit. The fire was extinguished in the early morning of 15 December. Imperial stated that no shortages were expected in the near term as a result of this event, and supply would be rebalanced through the company’s refining network as required.
The western Canada market was reported to be very quiet, with very little new tendering activity. There was one provincial tender on 5 December in Alberta, which called for 600t of Pen 150-200 for paving in Brazeau county. The work was taken at a C$538 netback to the refinery gate. Other recent bids in Alberta have also been in the C$530-540/t range for Pen 150-200.
There were no rack price adjustments announced in western Canada. But one market participant stated that these adjustments would most likely occur in January 2007, and would reflect market conditions at that time.
Demand in Alberta was reported to be up by 5pc this year, and is expected to increase further next year.
One western Canadian market was supplying wholesale asphalt into the domestic market, and reported its range to be at US$180-200/st on a fob basis.
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