Author Argus

A tale of two markets, U.S. is seeing low demand and an oversupply of asphalt; while Latin America, especially Argentina, is seeing increased imports and increased demand of asphalt.

Join Argus experts as they breakdown the market drivers for asphalt and what the outlook for prices are the rest of this year and beyond. 



Irina: Hello and welcome to our podcast, the Asphalt Story Americas edition. Today we want to give an overview of the Americas' market developments and our thoughts on how it will unfold in the upcoming months. I am Irina Vinogradova, senior manager for Argus Consulting Services, and with me today are Sara Tucker, editor of Americas Asphalt Report, Kauanna Navarro, senior reporter covering Latin America, and Luis Garcia, manager in Argus Consulting, responsible for crude and refined products coverage in Houston Office. So thank you so much for joining me. And let's probably start with you, Sara. What's everyone talking about in the U.S. asphalt market these days?

Sarah: Hi, Irina. Right now, everyone is talking about the lackluster demand and what seems to be an oversupply in the market. U.S. asphalt inventories are at healthy levels, maybe a little too healthy. They're above the five-year average, and they have been nearly all summer, which is pretty unusual. At the same time, demand has been lower than expected. In the first half of the year, the IA pegged demand 3.6% lower than the first half of 2022.

Irina: Right, that's surprising. What is causing that?

Sarah: So there are a few different reasons for this. On the supply side, we have more asphalt production. Earlier this year, we had a wide light heavy crude spread that encouraged refiners to run more heavy sour crudes and make more asphalt. So we started the year with some elevated inventories. We also have Sonovus bringing back their superior refinery after five years, and this brought additional asphalt to the market as well. So that was earlier this year. Crude differentials have since narrowed, but there are still good crack spreads and strong coker yields, which are encouraging refiners to run more of that heavy sour crude, which is still making more asphalt. Then demand-wise, we had inclement weather across some key regions of the U.S. earlier this year. This slowed down paving demand and contributed to the inventory build. Inflation has also weighed on demand. Rising interest rates have slowed down private work. Now on the public side, we've heard of bids coming in over engineers' estimates, and this has resulted in delayed projects or reduced budgets. So many expected IIJA, which is our large infrastructure bill to boost demand this year, but that doesn't seem to have been the case, or at least not yet. Anecdotally, we're hearing many of these larger projects haven't required a lot of asphalt upfront either.

Irina: Thank you, there has been quite a lot of detail in that. But I just wanted to see what is the impact on the asphalt prices in the U.S. of all that trends.

Sarah: For the most part, these fundamentals have kept asphalt prices pretty stable. We're not seeing the record highs we saw last year, that's for sure. And on the Atlantic Coast, it's helped keep the arbitrage between the U.S. and the Mediterranean closed as Mediterranean prices rise on stronger high sulfur fuel values. Most people are choosing closer waterborne cargoes or are railing in from the Midwest. And the Gulf waterborne price was unchanged for majority of the summer.

Irina: That's quite interesting, especially in light of crude prices that has changed to around about $90 a barrel, which is quite an uptick. Shouldn't these have some effect on asphalt prices?

Sarah: Now, normally it would, but remember inventories are higher than usual and demand has not been as strong across the U.S. as people expected this year. We've also just entered the fall. Northern regions are going to start seeing cooler weather and the paving season will begin to slow down. These fundamentals have so far outweighed the increase in crude. Now we've actually seen waterborne prices on the East Coast start to slide. I mentioned just a little bit ago that Gulf prices have been unchanged for most of the summer. Gulf asphalt has actually been some of the lowest-priced exportable asphalt available. As of Friday, September 22nd, it was pricing nearly $30 a short ton below Singaporean asphalt and around $70 a short ton below Mediterranean asphalt. As a result, we've seen a lot more product flowing out of the Gulf. More than 90,000 tons of asphalt left the Gulf in September alone, which was more than last month and well above September 2022 levels. The Gulf waterborne range widened to $400 to $440 a short ton on September 22nd. Now domestic cargo seem to be pricing at the lower end because that U.S. demand isn't as strong, but on the upper end we're seeing more the export cargoes. Quite a few have been heard headed to Europe and Latin America, which last year opted to buy more Mediterranean cargoes as U.S. asphalt prices were reaching, like, near record highs. I'll let Kauanna speak more on what's driving some of the demand in Latin America.

Irina: Thank you, Sarah. Thank you for this. Kauanna, maybe then now let's turn to you. Latin American markets are not mainly asphalt importers, but imports have been increasing in the last year, especially in South America. And the demand has increased as a result. So what is driving that?

Kauanna: Hi, Irina. There are a few reasons for that shift. The country that most caught our attention is Argentina. Last year, Argentinian waterborne imports weighted around 11,000 metric tons, which is 12% higher than in 2021 and 43% higher than 2019. One of the reasons for the increased demand coming from Argentina is the light grade of the crude extracted in the Vaca Muerta formation, which is very light and not suited for asphalt production. As Vaca Muerta's production increases and traditional production falls, Argentina needs to import more asphalt. Also in South America, Uruguay's state-owned ANCAP, the country's only producer, has not produced any asphalt since November 2021, and output is unlikely to resume this year or in the next. And market participants say ANCAP is focused on products with higher margins and that domestic asphalt demand has been met by imports. ANCAP expects the country's asphalt demand in 2023 to increase by 4% from 2022. In Brazil, northern and northeast production is not enough to meet demand in those regions. Nearby refineries are facing production issues and the crude slates are too light to make enough asphalt. The three asphalt refineries in both regions produced the combined 435,000 metric tons in 2022. But regional consumption was around 680,000 according to the oil and gas head leader, ANP. The difference was made up by asphalt supply from other regions in Brazil as well as imports.

Irina: That's interesting. Thank you. What we also noticed is that Argentina recently imported asphalt from Singapore, which is relatively unusual. So what is the reason behind that? Do you know?

Kauanna: Yeah, a Singaporean vessel unloaded asphalt in Argentina last month. A rare product flow in the global asphalt market indeed because it's too far, right? And market participants said that the lack of U.S. dollars in Argentina is challenging imports. Some companies are using Chinese currency instead, which could explain the unusual asphalt flow. This currency situation may be unfavorable to the U.S. suppliers. And the deals between Argentina and the U.S. Gulf Coast have been more challenging because importers are struggling to finance the product as Argentina has limited access to the U.S. donors.

Irina: It seems like demand is also quite active in the Caribbean. Do you think that this increasing lot on demand can be favorable for the suppliers in the U.S. Gulf Coast?

Kauanna: The Caribbean has been pretty active in the asphalt market lately. The region imported 112,000 metric tons in the first six months of this year, around 6% higher than the same period last year. However, U.S. Gulf asphalt suppliers will likely need to compete with supply from Colombia, which has heightened by almost 70% in the first half of 2023 from the same period in 2022. U.S. suppliers may also face additional competition from Venezuela, which has come back to the export market. In July this year, the country's state-owned oil company, PDV, resumed exports of some especially oil-related products to neighboring, including asphalt delivered to Brazil. And more deals between these two countries are expected to be concluded in the next weeks. Also, we can say the restart of the Isla refinery in Curacao may provide additional supply for Latin America sometime next year.

Irina: Thank you, Kauanna. That has been quite insightful. On this note, speaking of the near future, maybe we can turn to Luis. Luis, what are we expecting in the asphalt markets in the U.S. in the next six to 12 months?

Luis: So there was more asphalt in inventory in June this year than during the same month in 2020 and 2021 at the peak of the pandemic. So that's kind of telling. So if you couple that with a demand that was below what it was expected for the first half of 2023, then you have a good scenario for stable prices for the rest of the year or even possible downward pressure on prices. So we'll see. On the production side, the production in the first half of 2023 was lower than the first half of 2022 and 2021. It decreased around 2.5% when compared to the first half of 2022, which was also kind of surprising. So again, that fact combined with below expectation demand does not suggest that the total production in 2023 will surpass 2022. And if it does, it will be only marginally, only by a little bit. Also, a trend that we expect to continue is relatively high volumes of exports of asphalt. In the first half of 2023, asphalt exports were almost 7% higher than the same period in 2022. Producers and traders have been successful in finding outlets and buyers for that excess supply and they will for sure keep trying to do so.

Irina: Thank you. I know Sara already talked a bit about this, but what is your take on the relatively weak asphalt demand during the first half of this year?

Luis: Well, having the money available to spend is one thing, but being able to actually spend it is a different story. There's a lot of things that need to happen and many pieces must fall in place before that asphalt can actually be applied on the roads. We know that there is plenty of funding available from the government to invest on infrastructure and a large portion of that specifically on roads. But that is only one piece of the puzzle. Supply, storage, workforce availability, weather, and inflation are other critical factors. Supply has not been a problem lately, but as Sarah mentioned, weather, workforce availability, and inflation have negatively affected paving projects and consequently have also negatively affected total asphalt demand. Additionally, in general, jobs funded by the Infrastructure Investment and Jobs Act tend to have a lengthier pre-construction and planning period and some requirements related to made in the U.S. materials, which does tend to complicate things a little bit more. Lastly, I'll say that I would not be surprised if the government programs are extended a year or two. Just to be clear, I'm not suggesting that more funding or more money will be available. What I'm suggesting is that maybe, just maybe, the timeframe for this disbursement of those funds and the actual completion of projects could be extended as needed.

Irina: Okay, we have seen actually something pretty similar in Europe. But yeah, same question about Latin America. What do you expect in the next six to 12 months on the supply and demand side?

Luis: My answer won't be as long on this one. Kauanna already covered quite a bit on that front. But I will say that we expect the same trends to continue, the same trends that we've seen so far in the first half of this year. So politics and elections, as always in Latin America, will continue to drive demand. When there are elections, projects tend to be accelerated because that means votes for politicians. So that will be the case in some countries in Latin America, and in particular Argentina, they have elections this year. So another trend that I expect to continue is Brazil, they will keep being slightly short on asphalt while the demand is there. So that demand will have to be satisfied from somewhere. Also, for Argentina and Uruguay, we expect that they will continue to import lots of asphalt because they have ongoing projects and they're not producing. So there will be a lot of imports for those two countries. Some of that comes from Latin America or the Gulf Coast or Colombia, as Kauanna mentioned.

And that takes me to the next trend, which is that Colombia will keep being a key player in Latin America, especially in providing asphalt to the Caribbean islands. And actually, and surprisingly enough, Colombia in the last few years, and in particular this year, they've been competing with the U.S. Gulf Coast refiners for the Caribbean market, and they're eating out some market share. So that was not a scenario that we saw a few years in the past. And also, this is more of a... I don't know if it's a trend or a question, but I wonder if Argentina will keep buying asphalt using Chinese currency. I think they will. They're kind of aligned. But if there is a change of regime in Argentina, that may certainly change because the frontrunner for the Argentinian presidential election is someone from the right wing. So if he wins, I would expect that trend to stop immediately. He will go back to buy asphalt in dollars, but we'll see. And, well, I don't know if Kauanna has something else to add or someone else has something else to add to the Latin American trends for the next few months.

Kauanna: No, I think you are completely right, Luis. Politics brings a lot our demand over here. And we need to keep an eye on Argentina elections.

Irina: Thank you, guys. Thank you for this. Sara, Kauanna, Luis, many thanks for joining me here. And thank you, everybody, for listening. We hope to be back with you again soon with another update. And this time, it's going to be on the Asian markets. For further information about the bitumen coverage, or asphalt coverage as they call it in the U.S., you can check out Argus' bitumen publication, Argus Asphalt Americas and Argus Asphalt Annual 2023. And to learn more about Argus Consulting Services, please visit Thank you and see you soon again.

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