The steep increase in US wholesale
prices has forced some wholesale buyers to back away from wholesale asphalt
purchases. Several of these buyers have commitments on the books which are at
prices that are lower than the current wholesale values, making it difficult
for them to justify purchasing higher cost replacement barrels.
US Rocky
Mountain wholesale prices continued to strengthen, with prices moving up from
the $200-250 fob range to $225-265 fob last week. Turnarounds in the Rocky
Mountain region, along with the tight light-heavy crude price spread (and the
resultant switch to lighter crudes) have reduced the
supply of asphalt from these traditional wholesale supply sources.
Alon USA
announced the completion of two separate transactions totalling
$459mn to purchase Paramount Petroleum Corporation and Edgington
Oil Company.
Western
Refining announced the acquisition of an asphalt plant and terminal located in
El Paso, Texas and asphalt terminals located in Phoenix and Tucson, Arizona,
and Albuquerque, New Mexico from Chevron USA.
East coast commentary
East coast wholesale buyers have a genuine concern about asphalt resupply in the East coast. The supply situation appears to
be adequate for the time being, but the concern is about summer supply
availability, particularly in the second half of the year.
East coast
wholesale prices continued to creep up. An East coast refiner reported selling
a large barge of a premium grade product at $300-310 on a fob basis. The volume
is expected to lift in the next week or two.
One New
England buyer reported that the current market for PG 64-28 was at $305-310 fob
New Jersey refiners. Some quotes for PG 64-28 were heard at the $320-325
delivered price range.
An East
coast flux buyer reported recently purchasing a parcel of flux from an export
source at $320 delivered. The supplier stated that the parcel was already on
its way.
In New
England, Boston prices and southern Connecticut prices were holding at $305-310
fob range for PG 64-28. One marketer commented that most of the East coast had
already moved to $350 fob for PG 64-22, so it was just a matter of time for the
New England market to catch up.
In western
New York, one supplier raised its reference price to $305 from $280 fob,
effective from 5 May. This price increase was reported to have resulted in an
adjustment in the New York state index.
A western
Pennsylvania supplier stated that it had moved to quoting the state index for
highway work. The supplier stated that it was no longer protecting the 10pc
price window around the quoted price.
One East
coast refiner raised its prices on 2 May to $350 for PG 64-22 at all its East
coast terminal locations from New Jersey to North Carolina. This represented a
$25-50 increase in its prices, depending on the location.
Another
supplier raised its prices by $25 to $325-335 on 1 May. With this increase, the
supplier prices in New Jersey and Maryland went up to $325, while its price in
the Bronx in New York went to $335 for PG 64-22.
Another East
coast refiner raised its prices at all terminal locations last week. With these
increases, its prices in eastern New York and northern New Jersey had high
prices of $325 fob for PG 64-22. From southern New Jersey to coastal South
Carolina the supplier raised its prices with its highest price at $350 fob.
Inland North Carolina moved up to $360 fob. Atlanta prices moved up to $340,
while Savannah prices were at $325.
In Tampa,
Florida, one supplier reported a price of $332 or higher. Another Tampa
supplier moved its price up to a high of around $330. In Jacksonville, one
supplier moved its price to $345, while another moved its price to $330 fob.
A southern
Florida supplier will be opening up for business early this week. The supplier
stated that its opening price will be $360 fob for conventional asphalt.
Gulf coast commentary
Gulf coast wholesale prices rose by $35-40 in the US Gulf coast market. High
production costs and limited wholesale supply of asphalt were reported to be
the key reasons behind the price increase.
An eastern
Gulf coast refiner completed three wholesale transactions with three different
buyers. The supplier sold a total of 170,000 bl of PG
67-22 for delivery to various locations. The volumes are expected to lift
before the middle of May. Two parcels were sold at $285 fob. The third parcel
was sold at $310 delivered into a Gulf coast state, with a fob equivalent price
of $285. The supplier sated that it was evaluating whether it would have
additional volumes to sell in May.
Effective 1
May, an Alabama supplier raised its retail prices in the northern and central
part of the state from $275 fob to $300 fob for PG 67-22. Also effective on 1
May, a southern Mississippi supplier raised its prices for PG 67-22 from $275
to $300 for PG 67-22.
Effective
last week, a southern Louisiana supplier raised its price by $10 to $295 fob.
Another Louisiana supplier stated that its volumes were down substantially but
it was holding its prices at the $310 fob level.
One Texas
supplier raised its prices on 1 May from $300 to $325 fob. The supplier
reported that it had informed its customers that it would be raising its prices
on 8 May to $350 fob for PG 64-22. Effective 1 May, volumes moving from
Oklahoma into the Dallas/Fort Worth market were at $320 netback prices, an
increase of around $20.
In New
Mexico, prices were reported to be at $320 fob PG 70-22. Bids for PG 76-22 at
the last state DOT letting were over $500 on a delivered basis, or at $470-480
on a fob basis.
Midwest commentary
After strengthening substantially last week, Midwest
wholesale prices were reported to be holding in the $280-315 fob range for PG
64-22. One Midwest buyer reported receiving quotes from one supplier at the
$290 fob level. Another wholesale supplier was getting $315 fob on all its new
deals for May. The supplier was also quoting the $325 fob price for PG 64-22
for June.
Midwest
suppliers reiterated that the increase in wholesale prices was necessary due to
higher production costs and the shrinking light-heavy crude price spread.
The steep
increase in wholesale prices has forced some wholesale buyers to back away from
wholesale asphalt purchases. Several of these buyers have commitments on the
books that are at prices that are lower than the current wholesale values,
making it difficult for them to justify purchasing higher cost replacement barrels.
One Midwest
supplier is offering a $30 premium for PG 58-28 over PG 64-22. This premium
applies to both wholesale and retail volumes.
There is
concern being voiced in the Midwest that the high cost of asphalt could result
in more overlay and maintenance jobs, rather than new construction projects.
In Chicago,
Illinois, date-of-shipment prices were reported to be at $300 by one local
supplier. Another stated that several customers were lifting asphalt in May at
the $340 fob price for PG 64-22. One supplier stated that its price of $340 is
available for the month of May only, and that it expected its June price to be
higher.
Rack prices
in Milwaukee, Wisconsin were heard at $355 fob for PG 64-22 for May. The Bay
City area was at $360 fob, with a $30 premium for PG 58-28.
In
Minneapolis/St. Paul, Minnesota, one supplier was offering limited volume for
May to a few customers at the $300 fob price for May. The supplier stated that
it is selling minimal volume, and is not differentiating between PG 64-22 and
PG 58-28 in this market. One supplier stated that the matching of prices to
historical accounts is still going on in this market, but to a lesser extent.
In eastern
Iowa, prices were reported to be at $345 fob for PG 64-22. Omaha, Nebraska
prices were heard at $350 fob for PG 64-22. The Kansas City market was at $350
fob, while the Arkansas City, Kansas market moved up to $325 on 1 May. One
supplier raised its prices in Oklahoma to $300 for PG 64-22, effective 1 May.
One supplier
had its northern Ohio prices at $400 for date-of-shipment sales. Another
northern Ohio supplier was quoting $350 for PG 64-22. A Cincinnati supplier was
in the process of adjusting its price to $330 from $320 fob.
One Detroit,
Michigan supplier quoted $360 not-to-exceed for PG 64-22, with a $25 premium
for PG 58-28. The supplier stated that it was limiting quotes to its historical
accounts and to its historical market areas.
One
Indianapolis, Indiana supplier stated that it moved its quotes to $350
not-to-exceed. The supplier was offering a $30 premium for PG 58-28. Quotes out
of southern Indiana were heard at $330 fob, with a $20 premium for PG 58-28. In
northern Indiana, one supplier had its date-of-shipment sales at $340 fob for
PG 64-22.
Nashville,
Tennessee prices moved up to $295 fob from $285 fob for PG 64-22. Knoxville
prices moved up to $315 from $300, while Chattanooga prices moved to $330 from
$320 for PG 64-22.
Rocky Mountain & west coast commentary
Rocky Mountain wholesale prices continued to strengthen, with prices moving up
from the $200-250 fob range to $225-265 fob last week. Turnarounds in the Rocky
Mountain region, along with the tight light-heavy crude price spread (and the
resultant switch to lighter crudes) have reduced the
supply of asphalt from these traditional wholesale supply sources. Buyers
reported that there is very little wholesale asphalt available from the Rockies
compared to historical levels.
One Rocky
Mountain supplier stated that it had not made any asphalt in three weeks as it
has been sending all its vacuum tower bottoms to the coker.
The supplier expected to be back up and running over this past weekend, but did
not expect to have full production of asphalt until the first part of June.
One Rocky
Mountain supplier stated that if it did have wholesale asphalt to sell, it
would not have difficulty finding a buyer at the $250 fob wholesale price
level.
One Midwest
buyer reported purchasing an off-spec asphalt grade for blending purposes from
the Rockies at $200 fob. The supplier stated that the price for this product
increased by $20 for the month of May.
One Rocky
Mountain refiner reported selling some PG 58-28 and PG 64-22 at $250 fob its
refinery. The supplier stated that these volumes were moving by rail during
September, October and November. The supplier stated that any volumes that were
currently lifting were at the $225 fob price.
Montana bid
a small PG 64-22 job last week. Quotes were heard at around the $250 fob level.
PG 64-28 was bid at $315 fob from one supplier, who was successful in taking
the business. Another supplier was at $309 fob. A small PG 64-34 job was bid at
$390 fob by a local supplier.
Wyoming
suppliers do not appear to be bidding at lettings. One Wyoming supplier
notified its customers that that they do not have asphalt to supply. Another
stated that it would require a price of $330-375 fob to participate in the
retail market. The supplier stated that this price level reflected its coker economics. In Colorado, quotes from one supplier were
heard at the $295-315 fob level for PG 64-22.
One Arizona
supplier stated that its obligations get over in June, after which it will move
to month-to-month pricing. The supplier stated that its prices in Phoenix were
at $315 fob for PG 64-16 and PG 70-10. Southwest suppliers continue to find the
supply situation for wholesale asphalt extremely tight.
In northern
California, one supplier raised its price on 1 May to $345 fob for non-modified
grades, PG 64-10 and PG 64-16. In southern California, one supplier raised its
prices to $275 fob, effective 1 May for PG 64-10 and PG 64-16.
Alon USA
doubles its US asphalt assets through two California acquisitions.
Canada commentary
Crude price strength
and the narrow light-heavy crude price spread continued to put pressure on
western Canadian prices. Western Canadian rack prices felt the most pressure as
the last time these prices were changed were late last year and very early in
2006.
One west
Canadian refiner raised its rack prices by C$40, effective 5 May. With these
rises, the supplier's price in Edmonton went up to C$360, Vancouver to C$400, Kamloops to C$410, and Winnipeg to C$400.
Another west
Canadian supplier informed its customers on 3 May that it would be raising its
rack prices on 8 May by C$40. With this hike, the supplier's price in Edmonton
went up to C$360, Vancouver to C$400, Prince George to C$415, Kamloops to C$405, and Winnipeg to C$400.
Last week,
Manitoba bid its first highway job for the 2006 paving season. The job bid on 4
May and called for 4,000t of Pen 150-200. One supplier did not bid the job. Fob
equivalent prices from suppliers that did bid the job showed a very wide range
for prices. Prices were reported at C$381, C$394 and C$470. The supplier that
bid C$381 was reported to have won the work.
Eastern
Canadian posted prices have reached new heights. One local supplier raised its
posted prices by C$20 on 8 May to C$415 for PG 58-28, and C$445 for PG 64-28.
This followed a C$25 increase in posted prices which occurred on 1 May.
The current
market in Montreal, Quebec was reported to be at C$385-390 fob for PG 58-28,
while prices in Toronto were at C$380.
Eastern
Canadian wholesale buyers are facing tremendous pressure to raise their retail
prices. Higher replacement costs, due to the increase in
Midwest wholesale prices, was reported to be the main reason behind the
price pressure.
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