Latin American waterborne asphalt imports fell by 13pc in the first half of 2022 compared with a year earlier as asphalt prices in the US — Latin America's primary foreign supplier — rose by over 50pc during the same period.
Latin American waterborne imports fell by 13pc to 320,400t in the first half of the year, compared with 367,800t in the first half of 2021, according to vessel tracking data from Vortexa.
Argentina was the main destination for asphalt, accounting for around 30pc of the total import demand. Mexico was the second-largest destination, representing 25pc of the total demand. The US Gulf coast continued to be primary source of asphalt delivered to Latin America, but high US prices and logistical constraints have remained a significant hindrance to new deals in the region.
Over the past six months, the rising cost of asphalt has discouraged Latin American buyers from new purchases. Gulf coast asphalt hit a 14-year high of $620/st fob on 17 May. Gulf coast asphalt was last assessed at $610/st fob. That was up from $410/st fob at the beginning of 2022 and $392/st fob a year ago. Gulf coast asphalt has become more expensive as motor fuel markets tightened in the US, incentivizing refiners to coke their residual bottoms rather than produce asphalt. Motor fuel markets tightened even further after the US initiated embargoes on Russian crude and product imports in March.
The sharpest decline in demand for US asphalt was seen in Mexico, where waterborne US imports in the first half of 2022 fell by 53pc from the same period a year prior to 80,100t.
Costa Rican imports also declined, slipping by 41pc to 27,200t through the first half of the year, and Chilean imports fell by 14pc to 41,500t.
Dominican Republic imports totaled just 9,600t, compared with none in 2021 and 87,200t in 2020.
Argentina returned to the waterborne asphalt market in 2022, bucking the region's declining imports trend. The country imported 100,600t through the first half, up from 11,800t in 2021 and zero tons in 2020. Argentina began increasing its imports to replace lost asphalt supply according to traders. Argentina has imported asphalt from both Russia and Brazil in the past.
The Brazilian export asphalt market has also grown tighter as domestic infrastructure activity has picked up in 2022. The Brazilian construction sector grew by 9pc in the first quarter compared with the same period in 2021, according to the gross domestic product numbers. Also, Brazilian purchases of polymer asphalt from Russia have dried up after the US, EU and others placed sanctions on Russian energy trade earlier in the year, further tightening the regional market.
Tighter Brazilian supply has also left fewer imports for Argentina, with Mediterranean and US Gulf suppliers competing to fill the supply gap. Argentine buyers have also recently taken a large amount of material from Europe, prompted by lower prices in southern Europe relative to the US Gulf. The US Gulf coast's premium to asphalt in Spain rose to approximately $179/st last week.
But tender activity from Argentina has dried up in recent weeks, indicating a potential drop in Argentine imports in the coming months.
