New York, 21 July (Argus) —
East coast
Wholesale asphalt supply was tight on the East coast. There was no spot availability of PG 64-22 reported, but one supplier commented that because of economics it would only sell wholesale asphalt if the price was the same as the rack.
Last sales for PG 64-28 wholesale asphalt were heard at $580-620 delivered into New England. One buyer stated that while wholesale prices were rising, it was uncertain if it could get the PG 64-28 asphalt volumes it needed for the 2008 paving season.
Concerns over supply availability has resulted in some discussions with the individual state Department of Transportation on whether asphalt grades could be switched to ensure that jobs get completed in 2008.
In New England, Massachusetts rack prices for PG 64-28 were at $645-665 fob. In southern Connecticut, prices were at $640-660, inclusive of the 7pc gross receipts tax. The gross receipts tax was scheduled to increase to 7.5pc in the week of 7 July, but faced a legislature vote on 11 June that delayed the tax increase. Some local marketers felt that the tax hike would not go through.
Demand for paving asphalt in New England states was off by 15-20pc so far in 2008. One marketer commented that it has seen a steady decline in demand in this region in the past four years.
One East coast supplier had its customers on PG 64-22 allocation at the rack in the northern East coast states, from New York to Virginia starting from 7 July. Unexpectedly brisk asphalt rack liftings was the main reason behind the supply tightness, and the resultant allocation. The supplier was hoping to remove the allocation as soon as its supply situation eased.
One East coast supplier was holding its rack asphalt prices for new sales of PG 64-22 at $675 fob from New York to Florida. The supplier's lower prices were older deals that were tied to the state indexes.
A western New York supplier was at $625 fob. One western Pennsylvania supplier was at $625 fob for PG 64-22. Another western Pennsylvania participant was reported to be at $635 fob.
One supplier raised its Florida prices by $50 on 12 July. With this increase, the supplier's price in Tampa went to $650. Jacksonville, east Florida and southern Florida went to $665 fob for PG 67-22.
Gulf coast
A Gulf coast supplier sold 30-40,000bl of PG 67-22 for delivery by the end of July. The volume was sold at $600 fob. With this increase, Argus' Gulf coast wholesale barge ranges (for the east and west Gulf coast) rose form $500-505 to $590-600 fob for PG 67-22 and PG 64-22.
Gulf coast refiners were watching their supplies closely in this very tight asphalt market. Some refiners were keeping their wholesale suppliers for their own terminal system. Additionally, refiners have been unwilling to sell asphalt in the open market at a price that did not allow them to keep up with overall steep rise in crude oil prices.
Gulf coast refiners reported receiving a number of inquiries for wholesale supply from buyers in the US and from overseas. One Gulf coast refiner stated that it had no idea what its wholesale supply situation would be like for August and whether or not it would have any availability to sell into the open market.
Gulf coast retail asphalt prices were stable to higher, as a result of pressure from strong crude oil prices and tight asphalt supply. But polymer asphalt volumes were short and price spreads for polymer grades were widening in some markets. In other markets there were no polymer asphalt availability for those buyers who did not have written supply contracts.
One Alabama supplier informed its customers that it was raising its prices on 21 July by $50 to $650 fob in northern and central Alabama. Prices in southern Mississippi were also moving to the $650 fob level for PG 67-22, effective 21 July.
One southern Mississippi supplier raised its premium for PG 76-22 to $160 fob over PG 67-22, effective July 21. This represented a $10 widening in the premium over PG 67-22. Last year, PG 76-22 was at a $100 premium over PG 67-22.
A southern Louisiana supplier raised its prices by $50 to $640 fob for PG 67-22, effective 12 July. Southern Texas were holding at around the $600 level for Houston and Corpus Christi, and $610 fob in Brownsville.
The New Mexico market was reported to be very tight on asphalt. One supplier raised its prices by $50 to $625 fob for PG 64-22 on 14 July. Another supplier was at $650-700 fob for PG 64-22.
Midwest
Some Midwest wholesale asphalt buyers are out seeking, but they cannot find any wholesale asphalt available. Another buyer stated that suppliers were only focussed on meeting the needs of their traditional customers that were buying asphalt from them year-round. There was concern voiced that jobs could be cancelled this year if asphalt supply remains tight or short because of poor refinery economics and a lack of incentive for refiners to make asphalt.
The Midwest wholesale barge price range for PG 64-22 rose from $570-600 fob to $580-620 fob. One supplier of rail wholesale asphalt increased its price from $575 fob to $600 fob, effective 18 July. Some buyers were still pulling on older wholesale contracts that were in the $550-560 fob range for PG 64-22.
One Midwest supplier had a $50 premium for wholesale PG 58-28 over wholesale PG 64-22. Another Midwest supplier had a $30-40 premium for wholesale PG 58-28.
One Midwest refiner sold 20,000bl of roofing flux for deliver in the second half of July. The price was $625 fob, and the wholesale volume will be delivered by truck.
Midwest retail asphalt prices continued to strengthen, as a result of pressure from strong crude prices and tight asphalt supply.
In Kansas and Oklahoma, prices moved up by $50 on 14 July to $650 fob because of pressure from higher crude and relatively weaker light product prices.
The Chicago, Illinois market was very tight on supply. Date-of-shipment prices in Chicago were in the $680-700 fob range or PG 64-22. Polymer asphalt was reported to be non-existent, with no quotes available from local supplier. One Illinois supplier was at $700 fob. One southern Wisconsin supplier was at $720 fob for PG 64-22.
In Michigan, one supplier was at $725 fob for PG 64-22 spot sales and for fixed-and-firm quotes for future 2008 work. Another Michigan supplier was at $625 fob for PG 64-22.
Northern Ohio was at $625 fob, according to one player, and $650-700, according to another. A southern Ohio supplier raised its prices by $50 on 12 July to $625 fob for PG 64-22. One supplier was at more than $700 for future PG 64-22 quotes in northern Indiana.
Northwest Indiana was at $650-700. Waterloo prices were at $640 fob. Indianapolis, Indiana was at $650 fob, while southern Indiana was at $637 fob for PG 64-22. One Ohio supplier was quoting no less than $700 fob for future PG 64-22 work.
Eastern Kentucky prices went up by $50 on 12 July to $625. Louisville prices increased by $50 to $625. Kuttowa prices were at $670 fob.
Chattanooga, Tennessee prices increased on 12 July by $50 to $635 fob. Memphis, Nashville and Knoxville moved up to $640, $650 and $660, respectively.
Rocky Mountain & West coast
?Rocky Mountain asphalt-producing refineries had very little wholesale asphalt to offer in the open market as they were focused on meeting the needs of their traditional wholesale customers. One refiner stated that it was not interested in taking on any new customers.
Refiners in the Rockies and west coast market have cut runs as a result of high production costs for asphalt. Some west coast refiners have cut runs by as much as 30pc of capacity. As a result, refiners have been watching their asphalt inventories very closely.
One Oregon supplier raised its PG 64-22 prices to $650 fob on 15 July. PG 70-22 was reported to have a $10 premium over PG 64-22. Idaho was reported to be at $650-700 fob, according to one marketer. PG 70-28 was reported to be in tight supply in Idaho.
In northern California, prices were in the $630-660 fob range. One supplier was at the $655 fob level and was holding its price. The southern California market was unchanged at $690-710 fob range. One southern California marketer informed its customers that it was moving to the $730-740 fob range for PG 64-10 and PG 70-10, effective 20 July.
One southern California supplier stated that it was not bidding any polymer work because of a shortage of polymer. The price for polymer PG 76-22 was at $835 fob in southern California.
One supplier in the Arizona market had its customers on allocation as a result of tight asphalt supply. In Phoenix, one supplier had a July posted price of $700 fob for PG 70-10, and had a selling a selling price of $650-700 fob. Another Phoenix supplier was at $750 fob for PG 70-10, effective 10 July.
In northern Arizona, one supplier had a posted price of $725 fob for July for PG 64-22 and PG 64-16, with a selling price of $675-725. The posted price was $735 fob for PG 58-22 and PG 58-28, with a selling price of $685-735. Another northern Arizona supplier was at $750, effective 10 July.
One supplier in the Phoenix market has informed its customers that it will be increasing its posted prices in August by $185 to $885 for PG 70-10, PG 64-22 and PG 64-16. The supplier will also be raising its northern Arizona price by $160 to $885 for PG 64-22 and PG 64-16. The posted price for PG 58-22 and PG 58-28 will increase by $160 to $895 fob.
In Las Vegas, Nevada, one supplier had its July selling price at $650-700 for AC-30 and AC-20, with most of the volume at $650 fob. The supplier was at $660-710 for PG 70-10 and AC-40, with most of the volume at $660. PG 64-22 and PG 64-16 prices were also mostly at $650, with some prices as high as $700 fob. One Las Vegas supplier informed its customers that it was increasing its posted prices for August from $700 to $785 fob.
In Las Vegas, Nevada, polymer modified grade PG 76-22NV was at $750-800 fob for July. But for August one supplier was quoting $900-950 fob for PG 76-22NV.
There are about seven jobs in the Nevada market, totalling 50,000-60,000t of asphalt that may not pave this year because of the shortage in polymer. Asphalt paving contractors that were counting on these jobs for the 2008 paving season are concerned about how the loss of these jobs will impact their bottom line.
Canada
The asphalt market is tight in eastern Canada, according to local participants. One player stated that it has been unable to get imports into the region, and one or more refiners were processing less heavy crude due to weak economics for running asphalt. Some suppliers are looking to buy additional asphalt to supplement their own supplies.
Some eastern Canadian suppliers stated that they have been unable to get wholesale asphalt from the Midwest market because of lower availability and refiners focus on meeting the needs of their traditional year-round wholesale buyers.
One eastern Canada supplier notified its customers that it would be raising its posted prices by C$50 ($50), effective 21 July. With this change, the supplier's posted price for PG 58-28 rose to C$718/t fob. Another supplier raised its posted price on 17 July by C$80 to C$682/t fob. Differentials for premium grades remained unchanged, with PG 64-28 at a C$40 premium, PG 58-34 polymer at a C$80 premium, and PG 64-34 polymer and PG 70-28 polymer at C$140 premiums.
One Quebec supplier was reported to have taken its asphalt selling price for PG 58-28 up to the C$735 fob level, effective 17 July. The current market was reported to be at C$635-645 fob for PG 58-34. Quebec marketers are awaiting the next Ministry of Transportation (MTQ) provincial bid that will be held at the end of July and will have volumes for August paving.
Roofing demand is strong in eastern Canada, with roofing plants running at capacity. Prices for roofing asphalt were reported to be moving in line with conventional paving grade asphalt in the region.
Western Canada posted prices were unchanged following the increases that were implemented by two local suppliers on 8 July and 11 July, respectively. With the increases, the price in Edmonton moved up to C$695, Vancouver to C$735, Winnipeg to C$735, Kamloops to C$745 and Pricing George to C$755 fob.
The western Canada province of Saskatchewan was reported to be tight on asphalt. Last prices in Alberta were around C$660/t for Pen 150-200 for 2008 paving. Projects that would pave in 2009 had a C$100 premium over 2008 prices. Last numbers heard in British Columbia were at C$660 fob.
In Saskatchewan and Manitoba, netback prices to Lloyd were at around C$665 fob, while Manitoba prices fob Winnipeg were at C$720-725 fob.
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