Viewpoint: US aromatic octane demand set to soften

Spanish Market: Oil products, Petrochemicals
29/12/23

US aromatics demand for boosting gasoline octane may decline in early 2024 as values for low-octane, paraffinic naphtha moves closer to gasoline.

High-octane demand is set to soften should naphtha's discount to gasoline narrow and gasoline prices remain low. But this should not preclude seasonal pricing support for aromatics beginning in March and April.

US naphtha exports have increased from a three-year low at 191,000 b/d in August 2022 to 320,000 b/d in September 2023, based on Energy Information Administration (EIA) data. Rising exports have reduced US naphtha inventories and narrowed the naphtha-gasoline spread to -$111/t in first-half December, nearer the historical 2019 average of -$105/t and down from the all-time widest at -$621/t in June 2022.

Ethylbenzene (EB) and cumene (CU) gasoline blending have supported prices for feedstock benzene (BZ) for two years, as naphtha's price relationship to gasoline on the US Gulf coast decoupled from the 2019 historical average. The gradual recoupling of suboctane naphtha and gasoline prices to the historical 2019 average is set to continue as naphtha exports resume, moderating high-octane EB and CU demand for gasoline blending next year.

EB and CU gasoline blending demand pushed feedstock BZ higher in 2022, resulting in all-time high at 705¢/USG ($2,110/ metric tonne) in June that year, just as the naphtha-gasoline spread reached a record (see chart). A similar phenomenon occurred in September this year when benzene hit a high for the year of 429¢/USG ($1,284/t), after the naphtha-gasoline spread reached an historically wide monthly average of -$422/t in August.

As paraffinic naphtha exports decline, domestic stocks build, lowering prices. Blenders then purchase this cheaper naphtha to utilize in gasoline as a sub-octane, which spurs demand for EB and CU high-octane blendstock and for feedstock benzene in turn.

In first-half December, the naphtha-gasoline spread has narrowed to just over -$100/t as naphtha exports increase. Less suboctane placed in the US gasoline blending pool in the form of naphtha moving into 2024 means less need for high-octane components, including BZ-derived blendstocks EB and CU to meet octane specifications.

EB and CU as blendstocks will continue to drive demand for benzene in 2024, but as seen in the last two years, peak benzene prices in summer are set to weaken further on reduced octane demand.

Prices for toluene and mixed xylenes (MX) have also been supported by gasoline blending for the past two years, helping to mitigate weak demand for downstream paraxylene (PX) and polyethylene terephthalate (PET) caused by lower prices from Asia and unfavorable operating margins for selective toluene disproportionation (STDP) units to produce PX.

Demand for toluene and MX into downstream PX and further downstream PET could increase in 2024. Ongoing delays at the Panama Canal could cause issues in receiving PX or PET imports at the US Gulf coast, potentially boosting domestic PX and PET production.

A drought at the Panama Canal has been causing shipping delays between Asia and the US Gulf coast, with some ships rerouting around South Africa's Cape of Good Hope to avoid upwards of 40-day waiting periods at the canal.

On top of Panama Canal delays, the threat of US restrictions on Asian bottle-grade PET resin imports could unfold in 2024. A US investigation into Asian recycled PET imports could result in an antidumping duty on all Asian PET imports. Asian countries accounted for over 60pc of US PET imports in January-October 2023, according to Global Trade Tracker data.

Should BZ sustain a premium over toluene and MX prices, STDP operations could kick back in to produce PX and downstream PET to offset any possible shortages of PET imports. STDP operators typically require a 30¢/USG BZ-toluene margin to justify running units.

By Jake Caldwell and Nicole Johnson

US octane and suboctane gasoline spreads $/t

Asia PX vs US BZ and TOL $/t

US light naphtha exports versus spot price

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13/11/25

API pitches revamp of biofuel exemptions: Update

Updates throughout New York, 13 November (Argus) — The American Petroleum Institute (API) is pitching the White House and biofuel groups on a total revamp of how the US exempts oil companies from a program that requires biofuel blending, according to three people familiar with the lobbying group's work. API recently withdrew its support for a bill that would authorize 15pc ethanol gasoline (E15) year-round on its frustrations with changes to biofuel policy this year that oil companies see as too friendly to farmers and to some small refining competitors. The US for instance recently granted small oil refiners generous hardship waivers from a biofuel blend mandate and proposed requiring larger companies to blend more biofuels in future years as an offset. API's pitch — shared at a White House meeting this week — would require that companies seeking program exemptions must show that economic hardship stems directly from the biofuel program, a more stringent requirement than today, according to two of the people familiar with the group's work. Exemptions would also be restricted to companies with limited collective refining capacity, cutting off larger enterprises like Delek and Par Pacific that own multiple small units that qualify now. Smaller companies like Ergon and Kern Oil could still request waivers, but the total pool of potentially exempted gas and diesel volumes would be far lower. The oil group then wants the US to prohibit hiking other oil companies' blend requirements to offset those exemptions, a tougher sell to biofuel and crop groups that fear unchecked program waivers curb demand for their products. Larger merchant refiners that do not qualify for small refinery relief have also long pushed lawmakers for updates to the program and would not benefit from this proposal. API's idea is to pass legislation pairing updates to the small refinery exemption program with year-round authorization of E15, generally prohibited in the summer without emergency waivers because of summertime fuel volatility restrictions that do not apply to typical 10pc ethanol gasoline. That's a top priority for ethanol companies, otherwise at risk from an increasingly efficient and electric light-duty vehicle fleet. Congress last year nearly passed narrower E15 legislation, which API supported at the time but no longer does without more changes. Courts have struck down past attempts by federal officials to authorize E15 without emergency declarations and to drastically restrict biofuel exemption eligibility, likely limiting what President Donald Trump's administration can do without new legislation. API made the pitch to the White House this week, the sources familiar with API's work said. The White House is hosting other groups for meetings on fuel policy, including another one on Thursday on E15 that featured biofuel groups. Officials from across Trump's administration, including the US Department of Agriculture, have attended. "Administration officials hosted listening sessions with biofuel groups, agriculture and oil refiners to discuss their proposals on year-round E15", a source familiar with the matter said. It is not clear that biofuel advocates, insistent that the Trump administration entirely offset the impact of recent refinery exemptions, are open to the attempted compromise. The ethanol group Renewable Fuels Association declined to comment on E15 talks. Regulatory tweaks to boost ethanol supply would also do little on their own to help producers of other biofuels like renewable diesel. API declined to elaborate on what was discussed at any meetings with the Trump administration. "We appreciate the administration's leadership in bringing stakeholders together to advance a practical solution on E15 and small refinery exemption reform", API said. "We look forward to continuing to work together to advance a framework that supports fuel choice, strengthens the refining and agricultural sectors, and helps ensure a stable, reliable supply for American consumers." Under the Renewable Fuel Standard, the US requires oil refiners and importers to annually blend different types of biofuels or buy credits from those that do. The administration is late setting new biofuel quotas for 2026 but is expected to do so in the coming months, kicking off a flurry of last-minute lobbying about future volumes, exemptions and potential cuts to credits from foreign fuels and feedstocks. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

API pitches revamp of small refinery biofuel waivers

13/11/25

API pitches revamp of small refinery biofuel waivers

New York, 13 November (Argus) — The American Petroleum Institute (API) is pitching the White House and biofuel groups on a total revamp of how the US exempts oil companies from a program that requires biofuel blending, according to three people familiar with the lobbying group's work. The API recently withdrew its support for a bill that would authorize 15pc ethanol gasoline (E15) year-round on its frustrations with changes to biofuel policy this year that oil companies see as too friendly to farmers and to some small refining competitors. The US for instance recently granted small oil refiners generous hardship waivers from a biofuel blend mandate and proposed requiring larger companies to blend more biofuels in future years as an offset. API's pitch would require that companies seeking program exemptions must show that economic hardship stems directly from the biofuel program, a more stringent requirement than today, according to two of the people familiar with the group's work. Exemptions would also be restricted to small companies with limited collective refining capacity, cutting off larger enterprises like Delek that own multiple small units that qualify today. The oil group then wants the US to prohibit hiking other oil companies' blend requirements to offset those exemptions, a tougher sell to biofuel and crop groups that fear unchecked program waivers curb demand for their products. Larger independent refiners that do not qualify for small refinery relief have also long pushed lawmakers for updates to the program and would not benefit from this deal. API's idea is to pass legislation pairing updates to the small refinery exemption program with year-round authorization of E15, generally prohibited in the summer without emergency waivers because of summertime fuel volatility restrictions that do not apply to typical 10pc ethanol gasoline. That's a top priority for ethanol companies, otherwise at risk from an increasingly efficient and electric light-duty vehicle fleet. E15 legislation nearly passed Congress last year. API made the pitch to the White House at a meeting this week, the sources familiar with API's work said. The White House is hosting other groups for meetings on fuel policy, including another one today on E15 that will feature biofuel groups. API declined to comment on any meetings with President Donald Trump's administration. "We appreciate the administration's leadership in bringing stakeholders together to advance a practical solution on E15 and small refinery exemption reform", the group said. "We look forward to continuing to work together to advance a framework that supports fuel choice, strengthens the refining and agricultural sectors, and helps ensure a stable, reliable supply for American consumers." By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico climate pledge clashes with refinery push

13/11/25

Mexico climate pledge clashes with refinery push

Houston, 13 November (Argus) — Mexico's updated climate pledge sets its most ambitious emissions target, but the plan sits in sharp contrast to the government's push to increase crude processing and fuel output at state-owned Pemex's refinery system. Mexico submitted its new nationally determined contribution (NDC) ahead of this month's UN Cop 30 summit in Belem, Brazil, committing for the first time to an absolute cap on greenhouse gas emissions of 364–404mn t of CO2 equivalent (CO2e) by 2035, or 332–363mn t CO2e with international support. The target represents a cut of more than 50pc from a business-as-usual trajectory, according to the environment ministry, and aligns with Mexico's long-term commitment to reach net zero by 2050. But while Mexico promises steep emissions reductions, it is simultaneously doubling down on a fossil-heavy industrial strategy centered on reviving its aging refining system, boosting domestic output of gasoline and diesel and limiting private-sector participation across the downstream chain. Mexico's refineries — most of which regularly run at below 50–60pc of capacity — remain among Mexico's largest stationary emitters, with high rates of flaring, residual fuel oil production and energy inefficiency. The government has also poured billions of dollars into the new 340,000 b/d Olmeca refinery and continues to prioritize increasing crude throughput at the legacy system, even as maintenance shortfalls, outages and unplanned shutdowns remain common. Pemex processed about 950,000 b/d of crude across its seven domestic refineries in September, up by 8pc from a year prior and 57pc higher than the 604,300 b/d processed in September 2018, before former president Andres Manuel Lopez Obrador took office. Mexico's refining-heavy strategy took shape under Lopez Obrador, who made fuel self-sufficiency the centerpiece of his administration after years of under-investment and declining output at Pemex's refining system. His government moved away from the 2014 energy reform and proposed constitutional changes that would free Pemex from its obligation to operate as a "productive state company." The shift enabled greater political influence over Pemex's operations and reinforced a nationalistic focus on refining, even as the company posted financial losses and saw its crude output fall to 40-year lows. President Claudia Sheinbaum's administration has continued that trajectory. Backed by a congressional supermajority that allows her party to advance Lopez Obrador's reforms, Sheinbaum has maintained the emphasis on fuel self-sufficiency and continued to expand Pemex's role through increased state support. Mexico's NDC frames climate policy as compatible with economic development, job creation and "just transition" principles. But the plan is still vague on specific mitigation actions for the refining sector. "Mexico's ambition is clear, but delivering on these goals will require deep structural transformation and a clear, sustained investment strategy," said Francisco Barnes Regueiro, executive director of the environmental non-governmental organization the World Resources Institute in Mexico. Meanwhile, the government maintains policies and proposed reforms that favor Pemex and state utility CFE over private-sector companies, limiting private investment in cleaner fuels and renewable electricity. The lack of incentives for low-carbon technologies, combined with an aggressive push to increase domestic production of gasoline and diesel, contradicts the technical requirements implied by the emissions cap, according to market sources. The contradiction becomes more pronounced as Mexico prepares for the Cop 30 negotiations. Mexico, which now joins more than 50 countries that have updated their NDCs, will likely face scrutiny over how its energy agenda fits within its climate ambitions. For now, the gap between Mexico's stated targets and its refining-focused policy framework remains wide. Without clear measures to reduce emissions from Pemex's refining system, expand low-carbon fuels and introduce stronger regulatory incentives, the new NDC risks becoming another aspirational document. Pemex's crude throughput '000b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Cop: Report says 2035 targets 'make no difference'

13/11/25

Cop: Report says 2035 targets 'make no difference'

Edinburgh, 13 November (Argus) — The Nationally Determined Contributions (NDCs) to 2035 — climate plans and targets submitted to the UN — have made little difference on curbing temperature increases, according to a Climate Action Tracker (CAT) report released today led by the NewClimate Institute. The CAT report's '2030 and 2035 targets scenario' estimates the climate targets submitted to mid-November keep global warming at 2.6°C above pre-industrial levels, the same as last year. The Paris Agreement signed 10 years ago seeks to limit the rise in global temperature to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C. In the CAT report's 'pledges and targets' scenario — which includes 2030 and 2035 NDCs and longer-term net zero targets — the outcome has slightly worsened to 2.2°C from 2.1°C previously, mostly as a result of the US withdrawal from the Paris accord. "The US' withdrawal from the Paris Agreement has had really devastating effects at weakening the global momentum, and the impact of it is not fully reflected in the numbers," NewClimate Institute policy analyst Ana Missirliu said. The report shows that emissions under current NDCs are projected to reach 53-57 Gt of CO2 equivalent (CO2e) in 2030 and 48-52 Gt CO2e in 2035. This is above the levels consistent with a 1.5°C pathway, which would require emissions to fall to 27 Gt CO2e by 2030 and 21 Gt CO2e by 2035, according to the NewClimate Institute. "Almost none of the 40 governments the CAT analyses have updated their 2030 target, which is critical to keep warming levels below 1.5°C, nor have they set out the kind of action in new 2035 targets needed to change course," the report said. The report also found that some major emitters' targets, including the EU, fail to translate into a step-up in ambitions. The EU has introduced the use of international carbon credits to reach some of its recently agreed target to cut GHG emissions by 90 by 2040, from 1990 levels. "We have a lot of countries, and quite a lot of G20 countries, including Brazil and China, which won't have to put forward more policies to achieve their targets," Missirliu said. China has submitted a 2035 target the country can already achieve, she added. Other countries, such as the UAE, have very ambitious targets but lack the policy or policy signals to show that they can achieve them, she added. Global emissions continue to grow year-on-year, and will grow again next year, NewClimate Institute said. In China, the world's largest emitter, and India, where renewables are expanding significantly, projected emissions have gone up compared with the previous report, as energy demand and fossil fuel use continues to grow. The gap between countries' targets and the 1.5°C pathway is widening. "Even if all current NDCs and long-term targets were fully implemented, global emissions in 2035 would still be more than double the level required for 1.5°C compatibility," the report said. "The longer we wait, the more the gap grows," NewClimate Institute policy expert Kilas Hohne said. "At the heart of this crisis of inaction is the continued expansion of fossil fuel production and consumption," the report said. Countries in 2023 agreed to a call to transition away from fossil fuels but many are still expanding coal, oil and gas. The current growth rate for renewable energy is not yet aligned with the global call to triple renewables by 2030, from 2019 levels, but a growing number of countries are accelerating their transition, including Chile, Colombia, India, Ethiopia, Morocco and Switzerland, according to the NewClimate Institute. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

MR freight bookings up ahead of US deployment

12/11/25

MR freight bookings up ahead of US deployment

New York, 12 November (Argus) — Freight rates for refined oil products shipments loading onto medium range (MR) tankers in the US Gulf coast are rising on unusually strong demand from Caribbean and east coast Mexican buyers ahead of the growing US military deployment north of Venezuela. A charterer put an MR tanker on subjects for a US Gulf coast-Caribbean voyage at $875,000 lumpsum on Wednesday, nearly doubling from a near six-month low hit on 5 November at $440,000. Charterers put at least 18 MR tankers on subjects for US Gulf coast-loading voyages on 11 November alone, an exceptionally high amount of physical activity for the region and representing nearly 6mn bl of refined product demand from a single trading day. For comparison, the US Gulf coast exported 2.3mn b/d refined products in August, according to US Energy Information Administration data. The "majority of" these voyages were for "short-haul runs", according to a shipbroker. Buyers throughout the region may be concerned about supply disruptions if US military operations offshore Venezuela and Colombia escalate. The US Navy confirmed that the Gerald R. Ford carrier strike group reached Caribbean waters on 11 November, and that the strike group was comprised of the USS Gerald R. Ford aircraft carrier, two guided-missile destroyers and an integrated air and missile defense command ship. The carrier group is joining an amphibious ready group (ARG) that had been sitting southeast of Puerto Rico since 2 September, according to the US Navy's fleet tracker. The ARG is comprised of flagship USS Iwo Jima and two amphibious transport dock ships, the stated mission of which is to "safely embark Marines ashore". US president Donald Trump has suggested that airstrikes on Venezuela are a possibility ahead of the build-up of US naval forces in the region. The military operation is ostensibly focused on striking designated narco-terrorists in international waters, which the Pentagon said it has done seven times off the coast of Venezuela and twice near Colombia's Pacific coast by late October. Meanwhile, Colombian president Gustavo Petro announced the end of intelligence sharing with the US on Wednesday. Petro has called the US attacks on boats operating within Caribbean waters illegal. Colombia's Pozos Colorados port was the third most active destination port for US Gulf coast-loading refined products in the last 12 months, behind only the ports of Coatzacoalcos and Tuxpan on Mexico's east coast, according to Vortexa data. Buyers in Pozos imported 3pc of all US Gulf coast-loading products in that time, averaging 82,000 b/d. Caribbean buyers are the single largest drivers of demand by shipping region for US Gulf coast refined product exports, averaging a plurality of 22.2pc of all shipments at 580,200 b/d in the last 12 months, according to Vortexa. A flare-up in military activity and potential US strikes on mainland targets launched from the region could further disrupt flows to Panama, Bahamas, Honduras and Costa Rica among other countries in the region. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: US aromatic octane demand set to soften

Related news posts

API pitches revamp of biofuel exemptions: Update

API pitches revamp of biofuel exemptions: Update

API pitches revamp of small refinery biofuel waivers

API pitches revamp of small refinery biofuel waivers

Mexico climate pledge clashes with refinery push

Mexico climate pledge clashes with refinery push

Cop: Report says 2035 targets 'make no difference'

Cop: Report says 2035 targets 'make no difference'

MR freight bookings up ahead of US deployment

MR freight bookings up ahead of US deployment

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