Argus Asphalt Report - argusmedia.com/media/files/pdfs/samples/argus-asphalt.pdf · Argus Asphalt Report Contents Summary 1 Global bitumen wholesale prices 2 US and Canada 3-7 East

Copyright © 2014 Argus Media Inc

Argus Asphalt Report

Contents

Summary 1

Global bitumen wholesale prices 2

US and Canada 3-7

East coast 3

Gulf coast 4

Midwest 5

Rocky Mountain and west coast 6

Canada 7

Europe, Mediterranean and Africa 8

Asia-Pacific and Middle East 13

Crude 18

Oil industry news 19

Argus Media contact information 21

summary

Favorable paving conditions bolstered demand and prices at racks in the US northeast, relieving some of the pressure on distributor margins.

Export deals remained the focus at the US Gulf coast, but prices failed to push higher, with an abundance of supply putting a cap on the market.

Strong paving demand and a continued supply shortfall pushed prices higher in the Midwest. Rail and barge prices rose another $5-10/st as paving season kicked into full swing while supplies remained tight.

US Rockies rail prices edged higher this week, while rack markets were more volatile, with low-high spreads widening at some various locations. Asphalt distributors on the West coast reported little trouble with availabilities this week, as small cargoes began to arrive via rail and barge.

Canadian paving demand slowed this week as mid-summer provincial construction holidays halted activity on the ground. A government tender in eastern Canada indicated a rise in prices heading into August.

Prices in northwest Europe were steady to lower, tracing parallel moves in the fuel oil markets.

Some monthly price negotiations had yet to be concluded because of holidays, but prices were generally drifting lower after recent losses in other markets.

Negotiations for August supplies were still underway, but rollovers were already agreed in some markets and anticipated in others. Rack prices held at €425-440/t ex-refinery in Rotterdam and Antwerp.

Germany’s August prices were left unchanged in some cases and lowered by €5-10/t in others

One buyer said its costs had dropped €5-10/t to €430-435/t

Issue 14-31 | Friday 1 Aug 2014

asphalt prices at key locations, 28 Jul-1 augLow High ±

US rack prices, fob $/st

Northern New Jersey/New York City Metro 545 570 0

Coastal Texas 550 575 -3

Northern Illinois/eastern Iowa 580 595 +5

Southern California 535 545 0

Western Washington/Oregon 635 650 +5

US waterborne, fob $/st

East Gulf coast barge fob 520 525 0

West Gulf coast barge fob 515 525 0

Midwest barge fob 520 530 +5

Canada rack prices, fob $/st

Quebec 633 637 +18

Ontario 592 617 -7

Europe rack prices, fob $/t

Rotterdam 581 601 -3

Southwest Spain 628 642 -3

Asia-Pacific and Africa rack prices, fob $/t

South Africa 640 660 -25

Singapore 575 580 -5

Asia waterborne, fob $/t

Iran cargo fob 480 490 0

Singapore cargo fob 515 523 0

Taiwan cargo fob 513 518 0

South China cfr 560 578 0

st - short ton, t - metric tonne

Page 2 of 21Copyright © 2014 Argus Media Inc

Argus Asphalt Report Issue 14-31 | Friday 1 Aug 2014

GLobaL wHoLesaLe bitumen priCes, fob basis $/t

summary

Med and NWE HSFO prices on 31 Jul were used to calculate Europe and Africa wholesale bitumen prices

New Jersey

$595/t

West Gulf coast

$573/t

Bahrain

$550/t

East Gulf coast

$576/t

Greece

$527/t

Ivory Coast

$599/t

Iran

$485/t

Italy

$507/t

Japan

$528/t

Netherlands

$543/t

Singapore

$519/t

South Korea

$525/t

Spain

$512/t

Taiwan

$516/t

Thailand

$518/t

ex-refinery in the south, east and west of the country and to €425-430/t in the north and southwest.

Hungary’s MOL dropped its export prices by €5-15/t for August volumes. Regional players reported Hungarian exports into central/southeast European markets at €410-420/t ex-refinery. MOL was set to raise its export prices to Romania by €15-20/t in the first week of August to €460-465/t ex-refinery.

Egyptian refiner EGPC issued a fresh tender to import five bulk cargoes of Pen 60/70 bitumen during September for delivery into Alexandria. The first of the cargoes under the new tender is to be delivered into onshore tanks at Alexandria on 2-4 September

Spanish price levels for standard penetration grades of bitumen were agreed for August volumes at prices that were unchanged from July. That meant price assessments stayed at €480-490/t ex-refinery in the northeast of the country and at €460-470/t in the southwest.

Singapore penetration grade (pen) 60/70 was steady at $515-523/t fob, with trade slowing for Hari Raya Puasa holidays. Participants were starting to look at September cargoes, with most of August already placed.

Blending issues continued to cut Malaysian bitumen production, with refinery output slowing to a trickle this week. Buyers are expected to feel the impact of the slowdown when they start negotiating for August cargoes next week.

Indonesia’s truck racks were closed for Hari Raya Puasa holidays, but prices will likely be revised next week when paving resumes next week.

South Korean pen 60/70 was stable at $522-528/t, although refinery run cuts could support prices going forward. Vessels plying the China-South Korea route were sheltering to avoid typhoon-stricken areas, but the slowdown in vessel traffic had yet to impact Korean prices.

upcoming argus asphalt/bitumen conferences:

Argus Asia-Pacific and Middle East Bitumen 2014Singapore, 24-26 September

Argus Africa Bitumen 2015Accra, Ghana 4-5 February



hhh

0

20

40

60

80

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

east Coast

east coast asphalt prices $/stLow High ±

Rack prices, fob, 28 Jul-1 AugMaine 610 625* 0MA/NH 620 650* 0Connecticut 570 600 0Eastern and central NY 540 580 0Western NY/Western PA 515 585 -3Northern NJ/NY C Metro 545 570 0Delaware/SE PA/south NJ 540 560 0Maryland/northern Virginia 535 565 0Central and lower Virginia 555 570 0Coastal Carolinas 570 590 +15Inland Carolinas 550 600 0Inland Georgia 585 605 +8Coastal Georgia/northeast Florida 565 590 +15West coast of Florida 545 580 +15Southern Florida 550 595 +20Waterborne prices, 28 Jul-1 AugNew Jersey barge fob 530 550 0N New Jersey/New York City Metro cif cargoes 545 565 0New England cif cargoes 560 575* 0

Asphaltic crude breakeven economics are for a topping refinery and represent incremental barrels. * Represents PG 64-28; na = not applicable

Product prices31 Jul ±

Heating oil ¢/USG 278.71 +1.623% HFSO $/bl 90.35 -0.20

economics $/st31 Jul ±

Asphaltic crude breakevenMaya 473.31 -31.39Arab Heavy 632.06 -5.40Asphalt’s HSFO alternativeEast coast 463.23 -2.53Asphalt’s HSFO alternative arbitrage, economics to US east coastFrom US Gulf coast 73.29 +1.06From the Mediterranean 7.66 +1.14

Favorable paving conditions bolstered demand and prices at racks in the northeast, relieving some of the pressure on distributor margins.

One refiner in the northeast reported low inventories, supporting prices for railed shipments into the Midwest or Atlantic coast. Western Pennsylvania rail prices were running at around $540/st this week, with a price jump likely during the first full week of August.

Barge trade was quieter than normal, with few distributors looking for fresh supply at current prices. Tradeable levels were discussed around $530-550/st fob, nearly $60/st higher than at the same time last year. Midwest and Atlantic coast refiners are receiving less asphalt-rich Canadian crude than last year, and the light sweet Bakken many of them are now processing yields little asphalt.

Vessel activity slowed, with imports and exports both scarce. One vessel was anchored off Borco in in Freeport, Bahamas having discharged in Norfolk, Virginia.

Western Pennsylvania/New York rack prices were running at $515-540/st for contracts and $550-560/st for spot customers. One distributor was selling PG 64-22as high as $585/st. The Pennsylvania Department of Transportation put out another letting last week, suggesting paving work could extend late into the season. A gasoline tax in the state is providing increased funds for asphalt purchases on state projects.

Mid-Atlantic racks were flat, but at least one distributor expected to raise his prices by $20/st next week. The range of prices available in Baltimore widened, with highs running up to $600/st and lows offered at $540/st. That band was expected to narrow as prices are adjusted next week.

Some Atlanta racks were quoted at $605/st on Friday, while others were flat at $585/st. Charlotte and Jacksonville PG 64-22 was running at $575-585/st. Savannah rack prices rose to $570-580/st, and Wilmington moved to $570-590/st.

New England cargoes diff New Jersey barge $/st



hhh

425

450

475

500

525

550

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

East Gulf coast barges HSFO alternative

GuLf Coast

Gulf coast asphalt prices $/st

Low High ±

Rack prices, fob, 28 Jul-1 Aug

Alabama (southern) 555 565 0

Alabama (inland) 580 590 0

Louisiana/Mississippi (southern) 549 579 0

Louisiana/Mississippi (inland) 555 575 +20

Arkansas/northeast Texas 555 575 0

Texas (coastal) 550 575 -3

Texas (inland) 555 575 0

New Mexico 520 550 0

Waterborne prices, 28 Jul-1 Aug

East Gulf coast 520 525 0

West Gulf coast 515 525 0

Asphaltic crude breakeven economics are for a topping refinery and represent incremental barrels

Product prices

31 Jul ±

Heating oil ¢/USG 275.49 +1.57

3% HFSO $/bl 88.45 0.00

economics

31 Jul ±

Asphaltic crude breakeven

Maya $/st 463.88 -28.06

Arab Heavy $/st 645.64 -3.82

Asphalt’s HSFO alternative

Gulf coast $/st 451.71 -1.06

General refining economics, fob US Gulf coast

3-2-1 crack spread $/bl 17.54 +6.85

2-1-1 crack spread $/bl 17.54 +7.26

Export deals remained the focus at the Gulf coast, but prices failed to push higher, with an abundance of supply putting a cap on the market.

Multiple suppliers were aiming to sell at $530/st fob US Gulf, but bids at that level were harder to come by, with deals being made closer to $520/st and below. Gulf coast barge prices are currently $60/st higher than this time last year, while rack prices are on par with year-ago levels. Demand from the US midcontinent may support Gulf coast prices, with small volumes starting to leak up the river to substitute volumes that are being processed in midcontinent cokers.

Vessel activity was slow. The Asphalt Eagle left New Orleans partially laden on 28 July en route to Jamaica. Another asphalt vessel was seen anchored off Willemstad, Curacao, a storage point for Venezuelan product.

Rack movements were mixed. No changes were seen in Alabama, but inland Mississippi jumped to $570-575/st. Demand in the state was said to be especially strong heading into August, leaving one distributor scouring the market for extra volumes with which to refill his rack.

Houston was quoted flat at $550-575/st, putting pressure on distributors, as the margin between bulk and rack remained razor thin. At least one distributor said it would not likely be buying new volumes at current prices.

East Gulf coast barge vs HSFO alternative $/st

hhh

-20

-10

0

10

20

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

New Jersey barge = 0

East Gulf coast barge-New Jersey barge fob $/st



hhh

350

400

450

500

550

600

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Chicago Rack Midwest barge

hhh

350

400

450

500

550

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

East Gulf coast barge Midwest barge

midwest

Midwest asphalt prices $/st

Low High ±


West Oklahoma/Texas Panhandle 540 550 0

NE Oklahoma/Kansas/southwest Missouri 535 605 0

North Illinois/eastern Iowa (Chicago) 580 595 +5

South Illinois/eastern Missouri (St Louis) 560 590 0

Western Iowa/Nebraska 550 575 +18

North Dakota/South Dakota 530 550 0

Northern Minnesota/northern Wisconsin 545 560 0

Southern Minnesota/southern Wisconsin 585 620 +38

Northeast Indiana/north Ohio/Michigan 565 575 0

South Ohio/south Indiana/north Kentucky 575 585 +10

South Kentucky/Tennessee 580 590 +8

Waterborne prices, 28 Jul-1 Aug

Midwest asphalt barge 520 530 +5

Midwest roofing flux barge 560 575 +3

Strong paving demand and a continued supply shortfall pushed prices higher in the Midwest.

Rail and barge prices rose another $5-10/st as paving season kicked into full swing while supplies remained tight. A number of bulk Midwest suppliers were quoting prices at $530/st fob rail. A supplier out of Pennsylvania was quoting delivered prices into Ohio at $580/st and western Indiana at $605/st, with prices expected to rise by as much as $20/st in August.

A distributor in Tulsa, Oklahoma said it had seen an influx of soft material suitable for roofing flux, mainly from Baton Rouge and Oklahoma City. Another distributor of roofing asphalt said availabilities in Oklahoma were plentiful, with prices around $540-560/st.

In Michigan, the Department of Transportation held a letting on Friday, with offers heard between $580/st and over $600/st. One supplier raised PG 64-22rack prices by $10/st to $585/st. Another was at $580/st for the same grade. One large contractor said supply was a problem in Northern Michigan as reduced refinery output and heavy demand out of the west coast were limiting supplies for locals.

Rack prices in Chicago climbed to $580-595/st this week as contractors moved to finish paving jobs while the weather is good. Indianapolis and Detroit-area racks also firmed, with prices at $575-585/st for PG 64-22. Southern Kentucky and Tennessee rack prices shot up to $585-620/st.

Omaha prices were flat, forcing distributors to reconsider plans to buy in new supply. Midwest barge prices were approximately $60-65/st higher than last year, while rack prices were largely unchanged. Nebraska racks were running at $550-575/st, compared to $575-585/st in the first week of August last year.

East Gulf coast barge vs Midwest barge fob $/st

Illinois/E Iowa (Chicago) rack-Midwest $/st

hhh

500

550

600

650

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

North/South DakotaNorthern Minnesota/northern WisconsinSouthern Minnesota/southern Wisconsin

ND-SD, South MN-North WI, South MN-North WI $/st



hhh

350

400

450

500

550

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Rocky Mountain wholesale rail Midwest asphalt barge

roCky mountains and west Coast

rocky mountain asphalt prices $/st

Low High ±


Montana 520 530 0

Wyoming 510 520 0

Colorado 530 545 +10

Utah 480 490 0

Idaho/east Washington 485 510 0

Wholesale prices, 28 Jul-1 Aug

Rocky Mountain (rail) fob 500 520 +5

Product prices (Los Angeles)

31 Jul ±

EPA diesel oil ¢/USG 295.99 +5.27

HSFO 380cst $/bl 93.33 -0.40

asphalt’s Hsfo alternative $/st

31 Jul ±

West coast 475.95 -0.69

west coast asphalt prices $/st

Low High ±


Western Washington/Oregon 635 650 +5

Northern California 555 615 +8

Central California 535 545 0


Arizona 520 625 -8

Nevada 535 615 +38

Roofing flux rack prices, 28 Jul-1 Aug


Rockies rail prices edged higher this week, while rack markets were more volatile, with low-high spreads widening at some various locations.

Asphalt distributors on the West coast reported little trouble with availabilities this week, as small cargoes began to arrive via rail and barge. Rail prices out of the Rockies were in the $500-520/st range for PG 64-22 and PG 58-28, and volumes below $500/st were no longer available. Rockies rail prices were $100/st higher than this time last year

Demand was said to be especially strong in parts of Montana and Denver, surprising some market participants. One local refiner said it was unable to put any volumes on the rail as it was too busy meeting commitments at its rack. A distributor in Denver raised its rack prices to $545/st for PG 64-22.

Demand from DoTs in the Pacific Northwest was very low, according to distributors, with no public projects announced in the last two months in Oregon or Washington. August demand is expected to pick-up. Rack prices in Portland edged upward to a range of $635-650/st.

The range of rack prices available in California’s Bay Area widened to $65/st. One supplier quoted sales prices as high as $615/st, while another was selling around $555/st. Rack prices in Nevada and Arizona followed a similar pattern, with spreads in the latter increasing drastically. One supplier quoted sales prices at $615/st.

Prices in central and southern California were flat this week, selling at $525-535/st for PG 64-10 and 64-16.

Rocky Mountain wholesale rail-Midwest barge $/st

hhh

500

525

550

575

600

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Northern Southern

California rack: North vs South $/st



Canada methodology

Eastern Canada posted prices for asphalt: These are posted prices announced by suppliers and refiners in the Quebec market for asphalt grades they supply (conventional and polymer). The prices are listed by company, location and grades supplied, along with differentials for premium grades. The posted prices are reported in C$/t with effective dates.Eastern Canada asphalt prices for Quebec: This is actual selling prices in the Quebec market for grade PG 58-28.Eastern Canada asphalt prices for Ontario: This is actual selling prices in the Ontario market for grade PG 58-28. Roofing BUR liquid prices: This is built-up roofing pricing in the Ontario market.Western Canada posted spot prices for asphalt: These prices are also known as “rack postings” in western Canada. They represent pricing to stationary asphalt plants at various locations. Grades represented are Pen 150/200A for Edmonton, Price George, Kamloops and Winnipeg. The grade for Vancouver is PG 64-25 (Pen 80/100A).Western Canada asphalt prices for British Columbia, Alberta, Saskatchewan and Manitoba: These prices represent the “current market” and include winning quotes at highway tenders. Winning quotes are “fob the closest” supplier. Grade represented is Pen 150/200A.

Canada

Eastern Canada posted prices for asphalt C$/t

Asphalt grade Posted prices differential to PG 58-28 Effective date

Kildair (Sorel-Tracy, Quebec)

PG 58-28 790 - 01 Aug

PG 64-28 830 40 01 Aug

PG 58-34 polymer 880 90 01 Aug

PG 64-34 polymer 930 140 01 Aug

PG 70-28 polymer 930 140 01 Aug

Suncor Energy (Montreal, Quebec)

PG 58-28 755 - 03 Jul

PG 64-28 - - 03 Jul

PG 58-34 polymer - - 03 Jul

PG 64-34 polymer - - -

Eastern Canada asphalt pricesC$/t $/st

Low High ± Low High ±


Quebec 765 770 +33 633 637 +18

Ontario 715 745 +3 592 617 -7

Roofing BUR* liquid prices

Ontario 760 780 0 629 646 -9

st - short ton, t - metric. *BUR = Built-up roofing

Western Canada posted spot prices for asphalt

Company (location) Asphalt grade Current posted spot price

effective date

C$/t $/st

Husky

Edmonton, AB 150/200A 665 550 18 Mar

Vancouver, BC PG 64-25 (80/100A) 710 588 18 Mar

Prince George, BC 150/200A 730 604 18 Mar

Kamloops, BC 150/200A 720 596 18 Mar

Winnipeg, Manitoba 150/200A 710 588 18 Mar

Western Canada asphalt prices

retail prices, fob, 28 Jul-1 aug

base asphalt grade

C$/t $/stLow High ± Low High ±

British Columbia 150/200A or PG 64-25(80/100A) 580 600 0 480 497 -7

Alberta 150/200A 590 615 0 488 509 -8

Saskatchewan 150/200A 620 640 0 513 530 -8

Manitoba 150/200A 680 690 0 563 571 -9

Canadian paving demand slowed this week as mid-summer provincial construction holidays halted activity on the ground.

A government tender in eastern Canada indicated a rise in prices heading into August. The winning offer was at C$770.25/t for PG 58-28. Although one asphalt distributor said this month’s volumes were the highest of the year, volumes are not nearly as high as in the past, when government tenders were large and more frequent.

One major asphalt distributor was said to be especially tight at the moment and was having trouble supplying customers. In Ontario, prices were said to be firming to a C$715-745/t range, as cheap winter block volumes that were offsetting higher prices came off the market.

Activity in central Canada remained quiet this week, with one supplier preferring to focus on roofing flux markets, which were said to be trading C$75-100/t higher than paving grades.

hhh

600

650

700

750

800

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Quebec Ontario

Quebec/Ontario C$/t



hhh

-100

0

100

16 Aug 13 08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Netherlands (Rotterdam) SpainItaly GreeceIvory Coast

europe and afriCa bitumen

Prices in northwest Europe were steady to lower, tracing parallel moves in the fuel oil markets.

Some monthly price negotiations had yet to be concluded because of holidays, but prices were generally drifting lower after recent losses in other markets.

Negotiations in France, the UK, and the Benelux countries resulted in agreements to keep domestic prices unchanged, although small discounts were still thought possible. German prices were revised lower by €5-10/t.

A slowdown in construction activity and a drop in fuel oil prices stymied 1 August price hikes. But some expected suppliers to raise their prices on 1 September as the holiday season ends and demand improves. High-sulphur fuel oil prices stood at $569.75/t fob Rotterdam on 31 July, down from $572/t a week earlier and $590.25/t on 30 June. July averaged $572/t, down from $587.50/t in June.

Bitumen supplies were plentiful, and production glitches had little impact on pricing given the lacklustre state of demand.

The shipping market was quiet, with tanker fleets fully employed under normal contractual commitments. A Spanish oil refiner renewed its time charter on the 7,917 dwt Lagan until the end of August. The tanker was taking a cargo from Cepsa’s Huelva refinery to Dublin, where it was scheduled to arrive on 2 August for a part discharge, with the remainder to be placed into Belfast.

ukUK rack prices held at £435-450/t ex-refinery, as losses in the crude and fuel oil markets stopped sellers from pushing through planned price hikes.

european bitumen prices28 Jul-1 Aug €/t 28 Jul-1 aug $/t


Rack prices, fob*

Netherlands-Rotterdam 425 440 0 581 601 -3

Belgium-Antwerp 425 440 0 581 601 -3

Brussels† 430 445 0 587 608 -2

Germany north 430 440 -8 587 601 -13

Germany northeast 430 440 -8 587 601 -13

Germany south 430 445 -5 587 608 -9

Germany southwest 425 440 -5 581 601 -9

Germany west 430 445 -5 587 608 -9

France north† 465 475 0 635 649 -3

France central† 470 480 0 642 656 -3

France south† 475 485 0 649 663 -3

UK south^ 435 450 0 730 755 -4

Italy‡ 440 460 0 601 628 -3

Spain northeast 480 490 0 656 669 -2

Spain southwest 460 470 0 628 642 -3

South Africa rand 6,852 7,066 -130 640 660 -25

Cargo prices, cfr

West Africa# Nfc Nfc - 635 655 0

*truck prices, fob refinery or terminal †delivered price ‡price includes €31/t tax ^UK prices in £/t #not freely convertible

fob Mediterranean $/t 31 Jul ±

Straight-run fuel oil 3.5% sul. 566.75 -3.25

Vacuum gasoil 0.5% sul. 744.00 -13.25

bitumen’s Hsfo alternative $/t 31 Jul ±

Mediterranean 516.04 +1.56

cif northwest europe $/t 31 Jul ±

Straight-run fuel oil 3.5% sul. 585.25 -4.25

Vacuum gasoil 0.5 % sul. 749.50 -11.25

Europe and Africa wholesale differentials to HSFO $/t

market Bitumen’s differential to HSFO

The Netherlands (Rotterdam) -15 to 0

Spain -40 to -35

Italy -45 to -40

Greece -25 to -20

Ivory Coast +45 to +55

Grade represented Pen 60/70 or equivalent grade

Europe/Africa wholesale differentials to HSFO $/t



hhh

0

25

50

75

100

125

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

hhh

500

550

600

650

700

750

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

West Africa cargo Med HSFO

Demand continued to hold up well relative to the rest of Europe, but market participants reported at least some slowdown for summer holidays.

france-benelux Negotiations for August supplies were still underway, but rollovers were already agreed in some markets and anticipated in others.

Rack prices held at €425-440/t ex-refinery in Rotterdam and Antwerp. French prices were also unchanged, but northeastern markets could be weighed down by a €5-10/t price drop in western Germany that took effect on 1 August. French demand remained poor, and the slowdown was exacerbated by summer holidays.

Many Dutch and Belgian asphalt plants closed in the last week of July for a construction sector holiday period that will last until mid-August. Repair and maintenance work will subsequently resume on a number of major Dutch highways and intersections.

GermanyAugust prices were left unchanged in some cases and lowered by €5-10/t in others

One buyer said its costs had dropped €5-10/t to €430-435/t ex-refinery in the south, east and west of the country and to €425-430/t in the north and southwest. Another market player indicated prices in the west of the country were lowered to the €430-440/t ex-refinery range, while a domestic producer said it had dropped prices to €455/t ex-refinery in the south and west, and to €445/t in the southwest, east and northeast of Germany.

July demand was poor, with volumes approximately halved

according to one participant. Competition for market share amongst local producers and importers remained fierce, with discounts being offered on many accounts in a bid to keep business.

Hungarian refiner MOL was reported to have increased its export prices by €5-15/t into Germany and central and southeast Europe. One of the main Polish exporters into Germany was heard keeping its August prices unchanged.

Demand was expected to remain weak until mid-August, before a recovery in construction activity after summer holidays end.

Bitumen production at the PCK refinery in Schwedt, eastern Germany was reported to have encountered problems. Issues affecting bitumen output at Shell’s Godorf refinery were believed to have been resolved, adding to domestic and regional supplies after recent refinery restarts at Gelsenkirchen, Leuna and Lingen after turnarounds.

Central europe-balkansHungary’s MOL dropped its export prices by €5-15/t for August volumes.

Regional players reported Hungarian exports into central/southeast European markets at €410-420/t ex-refinery. MOL was set to raise its export prices to Romania by €15-20/t in the first week of August to €460-465/t ex-refinery.

Export prices for standard penetration grades from Bosnia’s Bosanski Brod refinery were reported to have risen by around $10/t in late July to reach the $550-560/t ex-refinery on 1 August. Discounts to fob Mediterranean high-sulphur fuel oil were in the $10-20/t range on an ex-refinery basis. Total


Italy rack diff HSFO Med $/t West Africa cargo cfr vs Med HSFO fob barge $/t



hhh

710

720

730

740

750

760

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

hhh

620

640

660

680

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

monthly bitumen sales from the refinery were reported at 24,000-25,000t for July.

Bitumen imports into Romania from one of the Polish refiner/exporters were reported at €440/t on a delivered basis, broadly equivalent to a Polish ex-refinery price of €360-365/t.

Serbian export sales into regional neighbours like Bulgaria and Romania were indicated at $10-15/t discounts to fob Mediterranean high-sulphur fuel oil on an ex-refinery basis. Strong demand in Turkey, Egypt, Lebanon and Tunisia were supporting prices in southeast Europe.

PolandBitumen demand in Poland was 2.23mn t in 2009, slipping to just over 2mn t in 2011 and falling sharply thereafter to 1.48mn t in 2013. Expectations are of a steady 2014, with fresh EU funds not expected to have a significant impact yet on the bitumen until 2016 onwards, a year after the anticipated start in 2015 of implementation of new road contracts helped by the fresh EU funds.

MediterraneanThe Eid-Al Fitr holiday period after the Muslim fasting month of Ramadan kept many market participants out of the market for all or part of the last week of July. Turkish holidays ran for the whole of that week, keeping discussions for bitumen shipments into that market extremely thin.

Nevertheless, Turkey – along with Egypt and Tunisia – were still regarded as the main markets drawing bitumen surpluses from regional suppliers, while the renewed flare up of violence in Libya meant a halt to bitumen cargo flows to that market was expected for at least the month of August.

The 3,500 DWT Katerina L was fixed to move a cargo from Livorno, Italy, to Rades, Tunisia, with the voyage taking place at the very start of August. The 3,000 DWT Sofia was en route to Lebanon, following a previous cargo shipment into Beirut on board the Katerina L. The Sofia was believed to have been used to make a shipment into the northern Greek port of Thessaloniki where a Greek trading firm runs a bitumen terminal.

Egypt provided a fresh boost to the regional market as EGPC issues a new tender to import five cargoes of bitumen during September.

egyptEgyptian refiner EGPC issued a fresh tender to import five bulk cargoes of Pen 60/70 bitumen during September for delivery into Alexandria. While 5,000-6,000t cargo sizes were again specified under the tender, the actual deliveries are likely to be – as with the current late July/August tender volumes – in 4,000-4,500t cargo sizes given the bitumen tanker availability in the Mediterranean. The first of the cargoes under the new tender is to be delivered into onshore tanks at Alexandria on 2-4 September, to be followed by a cargo delivery every 3-4 days thereafter. The tender is scheduled to close on 5 August, traders said, although EGPC sources were unavailable for comment during the Eid al-Fitr holiday in late July after the Muslim fasting month of Ramadan.

The first of two cargoes won by European oil trading firm Nimex under the existing tender awarded in recent weeks was set to arrive at Alexandria on 31 July on board the 5,000 DWT bitumen tanker Sunpower that shipped the 4,100t cargo from the Motor Oil Hellas refinery in Agio Theodori, Corinth, in Greece. The cargo will not be discharged until letters of credit have been


UK south $/t South Africa $/t



issued by EGPC for receipt of the volume. The first of four cargoes to be supplied by Switzerland-based trading firm Proton Energy under the same tender arrived at Alexandria on 31 July-1 August. That cargo (4,300t) was shipped on board Bituma 1 from Mohammedia to be followed by three subsequent shipments from the Hellenic Petroleum refinery in Aspropyrgos, Greece.

italyDomestic price levels were generally indicated steady, although weak demand for the time of year – caused in part by adverse weather conditions – has resulted in some selling in the €430-450/t ex-refinery range, inclusive of a €31/t government tax. One market player reported delivered price levels in northern Italy at €460-465/t. Another seller by contrast indicated average price in the north and centre at €455/t, with prices in the south of the country indicated around €15/t higher than that level. Price assessments edged down to the €440-455/t range.

Heavy rainfall was affecting much of northern Italy after adverse weather conditions in the second half of July that stymied construction work that is anyway still restricted by lack of government funding for road and other projects. Total July bitumen consumption on the domestic market is now unlikely to surpass levels in the same month of last year.

The heavy rain in late July had a direct impact on bitumen loadings on trucks at the Eni refinery in Livorno, temporarily restricting such loadings, a factor that coincided with the one-day strike on 29 July that halted refinery production at Eni’s Livorno and Taranto refineries. Eni was reportedly seeking to maximise its domestic sales in northern Italy from the Livorno refinery, although that effort was hampered by weak regional demand. In the south, the Taranto refinery was mainly focused on seeking export outlets, market participants said.

Talks were being held on 30 July between Eni management and unions representing refinery workers after a 24-hour strike on the previous day halted production at the companies refineries and other plants across Italy. The strike action, in protest against Eni’s plans to close a number of its refineries for economic reasons, was expected to be repeated during the course of August. The Livorno and Taranto refineries, both key bitumen-producing facilities, are under threat of closure.

spainDomestic price levels for standard penetration grades of bitumen were agreed for August volumes at prices that were

unchanged from July. That meant price assessments stayed at €480-490/t ex-refinery in the northeast of the country and at €460-470/t in the southwest.

Activity levels continued to improve during the peak summer season.

Fresh data released by the country’s constructors’ federation Seopan showed a continued rise in construction tenders offered by state controlled construction bodies and regional authorities. This was seen by the industry as offering some support to Spanish asphalt demand that has been hit hard by the financial crisis in Spain. (for full story, please refer to the asphalt and bitumen industry briefs section)

Mixed asphalt production in Spain stood at 13.4mn t in 2013, the lowest domestic volume for 25 years and confirming a 70pc decline since 2007, the Spanish Association of Manufacturers of Asphalt Mixtures (ASEFMA) said in a 23 July statement. ASEFMA said the number of companies involved in the sector had declined, with just seven companies now dedicated solely to production of hot mix asphalt. Across the EU27 countries, the decline in mixed asphalt production has amounted to 15pc since 2007, according to partial data so far released, ASEFMA said, adding that “Spain in the partner country that has the highest relative and absolute decline”.

The Spanish association estimates that the need for investment to replace and strengthen road surfaces across the country has reached €5.83mn, including €1.88mn in the state run highway network and €3.95mn in other roads, whether private, local or regional.

west africaHeavy and non-stop rain at the end of July through to the start of August in the Lagos area and other parts of southern Nigeria was severely hampering road and other construction activity and thereby limiting any fresh requirements for mixed asphalt and for bitumen.

Recent bitumen cargo arrivals included a 6,400t shipment on board the Biskra, owned and operated by a global bitumen shipping and trading firm. The vessel was discharging around 25 July into a Warri terminal operated by a European oil major, coinciding with another late July delivery – of a 4,000t cargo - into the terminal on board the Iver Accord.

No fresh cargo bookings were reported, although a number of trading firms were requesting freight rate quotes for





shipments from Europe, mainly the Spanish Mediterranean export terminals, to Port Harcourt in Nigeria and Takoradi in Ghana. Freight rate indications for Tarragona to Port Harcourt were reported at around $125/t and for Tarragona to Takoradi at around $120/t.

Import prices into Nigerian ports were pegged at $635-655/t on a cost and freight basis.

The Nigerian National Petroleum Corporation (NNPC) announced that it planned to resume bitumen production at its Kaduna refinery in a bid to reduce, or even end, imports of the product into the country. NNPC said that, in the initial phase of ramping up Kaduna operations, it planned to supply to the market around 5,000t of bitumen from storage tanks at the refinery and to produce a further 14,500t of bitumen from available residue in the August/September period.

Nigeria has produced little or no bitumen for at least the past five years, relying on imports of the product to meet domestic demand that stands anywhere between 500,000t/yr and 1mn t/yr

The Kaduna Refining and Petrochemical Company (KRPC) says it has the capacity to produce 1,796 tonnes of bitumen per day, which amounts to 655,000t in a full year of production. Actual annual production capacity is estimated at just 590,000-600,000t/yr, although no supply has been seen from the refinery for several years.

east africaExport activity and market discussions were very thin in the last week of July when large numbers of market participants, including Iranian producers and trading firms, were enjoying the Eid-Al Fitr holidays at the end of the Muslim fasting month of Ramadan.

The price range for Iranian drummed bitumen exports stayed at $520-545/t fob Bandar Abbas. Freight rates for drummed cargo shipments from Jebel Ali to Mombasa were pegged at $70-75/t for shipments moved in 182kg drums and at around $95/t for volumes shipped in 200kg drum consignments.

On 30 July, Kenyan President Uhuru Kenyatta launched a programme to increase the number of tarmacked roads in the country from 14,000km to 24,000km over the coming years.

“Under this Annuity Programme, we will complete 2000km of small roads within 2014/2015 financial year. This will be

followed by 3000km in 2015/2016 made up of 80pct small roads, and 20pc highways. In the 2016/2017 financial year, we will complete 5000km, 80pc of which will be small roads and 20pc highways,” Kenyatta said.

He added that wastage of public funds would be minimised “when private firms are contracted to build roads and other infrastructure projects.”

south africaDomestic prices for standard penetration grades of bitumen – Pen 35/50, 50/70 and 70/100 – were cut by around R100/t by the country’s suppliers with effect from 1 August to an average price level of R7,000/t ($650/t).



asia-paCifiC and middLe east bitumen

singaporeSingapore penetration grade (pen) 60/70 was steady at $515-523/t fob, with trade slowing for Hari Raya Puasa holidays.

Participants were starting to look at September cargoes, with most of August already placed. A 4,000t September cargo was heard selling at around $517/t t. A 3,000t cargo was also being negotiated, with the deal expected to conclude next week. September availabilities were expected to be tighter than August.

Singapore marine terminals continued to experience some loading delays, but conditions were improving in line with the weather.

Rack markets were quiet. Sales of pen 80/100 to Malaysian buyers were expected to slow in August, and prices were stable at $523-528/t.

asia bitumen prices, 28 Jul-1 augLocal currency/t $/t


Rack prices, fob

South Korea won 740,408 768,454 0 718 745 -1

Mumbai, India rupees 40,605 42,604 +250 669 702 -3

Mumbai, India drums rupees 43,704 45,704 +250 720 753 -3

Thailand baht 17,687 17,880 +109 550 556 -2

Indonesia rupiah 6,635,340 6,635,340 -8977 573 573 0

Singapore $S 717 723 -2 575 580 -5

Singapore ex-refinery to Malaysia $S 652 658 +3 523 528 0

Japan ¥ 73,000 80,000 0 710 778 -8

Export cargo/drum prices, fob

Iran - - - 480 490 0

Iran drums - - - 520 545 0

Bahrain dinar 207 207 0 550 550 0

Thailand baht 16,561 16,722 +162 515 520 0

Singapore $S 642 652 +3 515 523 0

Singapore drums $S 786 798 +4 630 640 0

Japan ¥ 53,987 54,501 +587 525 530 0

Taiwan NT$ 15,421 15,572 +40 513 518 0

South Korea won 538,311 544,498 +538 522 528 0

Cargo prices, cfr

China - north coast yuan 3,366 3,428 -11 545 555 0

China - east central yuan 3,428 3,644 -11 555 590 0

China - south coast yuan 3,459 3,570 -11 560 578 0

North Vietnam drums Nfc* Nfc* - 680 710 0

South Vietnam drums Nfc* Nfc* - 680 700 0

*not freely convertible Note: All cargo prices are for heated tankers unless otherwise specified. Exchange rates used effective for Thursday of week reported

Asia-Pacific products31 Jul ±

fob Singapore HSFO 180cst $/t 599.75 +0.50

fob Singapore HSFO 380cst $/t 597.75 -0.25

fob Singapore gasoil, high pour $/bl 117.55 -0.35

economics $/t31 Jul ±

Bitumen’s HSFO alternative Singapore 548.23 +1.25

bitumen freight rates, 28 Jul-1 aug $/tLow High ±

Singapore-south China 48.00 56.00 0.00

Singapore-east China 58.00 67.00 0.00

Thailand-south China 48.00 56.00 0.00

Thailand-east China 58.00 67.00 0.00

Taiwan-east China/south China 28.00 35.00 0.00

South Korea-east China 27.00 34.00 0.00

east China and south China both refer to coastal ports in the region

— Bitumen market participants



malaysiaBlending issues continued to cut Malaysian bitumen production, with refinery output slowing to a trickle this week.

Buyers are expected to feel the impact of the slowdown when they start negotiating for August cargoes next week.

Tank trucks were off the road for most of the week because of Hari Raya Puasa holidays, but a few small maintenance jobs remained underway in parts of the country. Tank trucks will be off the road for the weekend because of heavy traffic after the holidays.

ThailandThai rack prices fell $2/t to $550-556/t as heavy rainfall slowed paving.

Thailand’s refiner and petrochemical producer was expected to announce September availabilities next week. The refiner

will most likely offer one spot cargo, with all other material allocated to term buyers and rack customers. Chinese companies are the most likely buyers for the September spot cargo.

IndonesiaIndonesia’s truck racks were closed for Hari Raya Puasa holidays, but prices will likely be revised next week when paving resumes next week.

Market participants expect to have a better indication of September demand next week. Indonesian bitumen


Prices at China main refineries, 28 Jul-1 Aug

area province Refinery GradePosted

price yuan/t

±Contract

price yuan/t

± Posted price $/t

Contract price $/t

Nothwest Xinjiang Petrochina Karamay AH-70, AH-90, AH-110, AH-130 4,600 0 4,550 0 745 737

AH-100, AH-140, AH-180 4,550 0 4,500 0 737 729

Sinopec Tahe 90-A 4,500 0 4,400 0 729 712

90-B 4,500 0 4,400 0 729 712

Gansu Petrochina Lanzhou AH-90 No sale - No sale - - -

Shannxi Sinopec Xi’an AH-90 4,400 0 4,350 0 712 704

Northeast Liaoning Petrochina Liaohe AH-70, AH-90, AH-110, AH-100, AH-140 4,450 0 4,350 0 720 704

Panjin Northern AH-90, AH-110, AH-100, AH-140 4,450 0 4,380 0 720 709

North Hebei Petrochina Qinhuangdao AH-70, AH-90 4,450 0 4,350 0 720 704

Central Henan Sinopec Luoyang AH-90 4,400 0 4,350 0 712 704

East Shandong CNOOC asphalt AH-70, AH-90 No sale - No sale - - -

Sinopec Qilu 70 -A 4,450 0 4,400 0 720 712

90 -A, 70-B 4,400 0 4,350 0 712 704

90-B 4,350 0 4,300 0 704 696

Sinopec Jinan AH-100 No sale - No sale - - -

Zhejiang Sinopec Zhenhai 70-A, 90-A 4,400 0 4,350 0 712 704

70-B, 90-B 4,350 0 4,300 0 704 696

CNOOC Daxie AH-70, AH-90 No sale - No sale - - -

Petrochina Wenzhou AH-70, AH-90 4,200 0 4,100 0 680 664

Shanghai Sinopec Shanghai AH-70 4,350 0 4,300 0 704 696

Jiangsu CNOOC Taizhou AH-70, AH-90 4,550 0 4,400 0 737 712

Sinopec Jinling 70-A, 90-A 4,350 0 4,350 0 704 704

South Guangdong Sinopec Maoming 70-A, 90-A 4,350 0 4,280 0 704 693

Sinopec Guangzhou 70-A, 90-A 4,350 0 4,230 0 704 685

Petrochina Gaofu AH-70, AH-90 4,350 0 4,230 0 704 685

Southwest Sichuan CNOOC Sichuan AH-70, AH-90 5,080 0 5,070 0 822 821

— China refiners and bitumen market participants

australia import cargo prices $/tLow High ±

Thailand fob (Class 170) 533 543 0

Thailand fob (Class 320) 545 550 0

Singapore fob (Class 170) 535 540 0

Singapore fob (Class 320) 550 555 0



hhh

500

525

550

575

600

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Singapore cargo Thailand cargo

hhh

500

550

600

650

700

750

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Singapore drum Singapore cargo

consumption has softened this year because of elections and budget cuts.

Freight costs for imports into Gresik from Singapore were running at $33-35/t for a 3,000-5,000t capacity vessel.

south koreaSouth Korean pen 60/70 was stable at $522-528/t, although refinery run cuts could support prices going forward.

Vessels plying the China-South Korea route were sheltering to avoid typhoon-stricken areas, but the slowdown in vessel traffic had yet to impact Korean prices. Reduced refinery throughput could start to support Korean cargo prices going forward.

New data put Korea’s June bitumen production down 18.7pc month-on-month at 431,138t, but production was up 4.2pc year-on-year. Bitumen exports dropped to 291,734t in June from at 330,794t in May, but were up 21.8pc year-on-year.

Vietnam Vietnamese bitumen inventories remained high as demand slowed through much of the country.

The slowdown appeared to be deterring Singapore and Taiwanese marketers, with Vietnamese distributors saying they had yet to receive offers for September cargoes.

Demand is expected to remain weak in August, as the country is currently in its typhoon and rainy season.

JapanReduced paving demand continued to force Japanese bitumen onto the export market this week.

Cargoes were being sold into the Chinese market as a lack of new road projects left the country awash in supply. There was talk of a 3,000t cargo being sold to a buyer in Ningbo at an undisclosed price.

Rack prices were stable, but there was talk of some buyers receiving discounts.

australiaAustralian demand remained weak amid wintry conditions, but demand is expected to pick up in October as the country enters summer.

Distributors expected to see new road project tenders announced soon.

There was little interest in spot September material, but some buyers said they may could pick up one or two cargoes.

taiwan Taiwanese material was stable at $513-518/t fob, with four or five cargoes likely to be up for sale in September.

Taiwan’s privately-owned supplier will likely have 4-5 September loading cargoes, with price negotiations expected to begin next week. Taiwan cargoes normally move to Vietnam and the Philippines.

China Chinese import and rack prices held steady, in line with unchanged Korean and Singapore markets.

Run cuts at Korean refineries could support Chinese import prices in the weeks ahead, but fob Korea pricing was still


Singapore drums - Singapore fob $/tSingapore cargo vs Thailand cargo $/t




unaffected as of this week. A Ningbo buyer was heard picking up 3,000t of Japanese material at an unknown price.

On the export side, China’s state-controlled refiner sold a rare 3,000t cargo of into Thailand via a trader. The cargo loaded in mid-July.

IndiaIndian refiners raised their prices this week despite a slump in demand for bitumen.

Refiners upped their prices by 250 rupees ($4.10/t) effective 1 August despite a slump in rack demand. They were offering 1,000-2,000 rupees/t discounts depending on volume.

Demand for bitumen was expected to remain weak for the next six-eight weeks as the entire country is engulfed in heavy rains. Indian refiners produce fuel oil instead of bitumen in July-September because of slow paving work.

But consumption was expected to pick up in the fourth

quarter, as work commences on several delayed road projects following the end of the monsoon season.

iranIranian markets were quiet, but export prices were expected to fall next week in the wake of Eid-Al Fitr holidays.

Tandis International sold 1,500t of drummed pen 60/70 at $612/t fob Bandar Abbas ($518/t in free market currency). The buyer will pay 30pc in advance and in cash.

Traders were offering regular cargoes at $475-490/t fob Bandar Abbas for payment in cash, in advance. They were

Report of Iran export sale 26-31 July 2014

bitumen grade Producers Settled price $/t packing Volume

t destination

60/70 Pasargad Oil No supply Bulk/Drum/ Bituplast - Export by ship from Bandar Abbas

- Export By ship from Imam Khomeini port

- Supply ex-Tehran

- Supply ex-Arak

- Supply ex-Tabriz

Corus Energy Development 540 Bulk 1,000 Export by ship from Bandar Abbas

Tandis International (MTA) 612 Drum 1,500 Export by ship from Bandar Abbas

Esfahan Ghir 575 Drum 400 Export by ship from Bandar Abbas

Jey Oil No supply Drum - Export by ship from Bandar Abbas

No supply Bulk - Export by ship from Bandar Abbas

Jey Oil No supply Drum - Export by ship or truck, supply ex-Esfahan

522 Bulk 100 Export by ship or truck, supply ex-Esfahan

Azar Davam Yol 520 Bulk 2,000 Export by ship and truck, supply ex-Tabriz

Azar Bam Ayegh Kar 530 Bulk 1,500 Export by ship and truck, supply ex-Tabriz

Arka Energy & Refining 540 Bulk 50 Export by ship and truck, supply ex-Tabriz

Mehr Parsian 535 Bulk 400 Export by truck or ship, supply ex-Tehran

85/100 Pasargad Oil No supply Bulk - Export by truck ex-Tabriz factory

Drum - Export by truck ex-Tabriz factory

Jey Oil No supply Bulk/Drum - Export by ship and truck, supply ex-Esfahan

- Export by ship and truck, supply ex-Esfahan

- Export by ship from Bandar Abbas port

Esfahan Ghir 575 Drum 300 Export by ship from Bandar Abbas port

MC-30 West Bitumen & Asphalt 835 Bulk 195 Export by ship from Bandar Abbas port

Exchange rate 1$ = 26,253 rials, t= Metric tonne

Report of Iran domestic sale 26-31 July 2014Bitumen grade Volume t Settled price rials/kg

60/70 21,601 13,443-14,372

85/100 2,438 13,443

MC-250 112 18,744-21,042

Emulsion Rapid 0 9,400

Emulsion Slow No supply -

Exchange rate 1$ = 26,253 rials, t= Metric tonne



offering drummed material at $515-535/t fob Bandar Abbas for cash payment, and at $535-550/t fob Bandar Abbas with letter of credit. Jey Oil sold 100t of pen 60/70 at $522/t ($437/t in free market currency).

Azar Davam Yol sold 2,000t of pen 60/70 at $520/t ex-Tabriz ($440/t in free market currency).

iran local marketNational Iranian Oil Company (NIOC) dropped its vacuum bottom (VB) prices by 2pc this week.

Around 23,000t of vacuum bottoms changed hands at 11,157 rials/kg ex-Tehran and 5,000t sold at 11,688 rials/kg ex-Tabriz. NIOC sold 11,000t from its Bandar Abbas refinery and 6,060t from its Shiraz refinery, both at 11,157 rials/kg.

With vacuum bottoms falling, rack prices also moved lower. Jey Oil dropped its prices by 306 rials/kg for pen 60/70 and pen 85/100. It also sold a domestic cargo at 13,443 rials/kg ex-Esfahan.

Pasargad Oil was selling pen 60/70 at 13,433 rials/kg ex-Arak, 14,372 rials/kg ex-Tehran, 14,190 rials/kg ex-Bandar Abbas, and at 14,115 rials/kg ex-Tabriz. Akam Bitumen sold 1,500t of pen 60/70 at 13,739 rials/kg ex-Qom.

Shiraz Oil was offering pen 60/70 and 85/100 at 12,831 rials/kg ex-Shiraz, but no deal was concluded.

Total trade for the week came in at 24,151t, with 48,190t offered and 24,196t of demand.


hhh

450

475

500

525

550

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

Drum Cargo

hhh

525

550

575

600

625

08 Nov 13 14 Feb 14 09 May 14 01 Aug 14

North China South China

Iran drum vs cargo $/t North and South China cargo cfr prices $/t



hhh

70

80

90

100

110

10 Jun 14 26 Jun 14 16 Jul 14 01 Aug 14

WTI Lloyd Blend

hhh

-5

0

5

10

15

$/bl

28 Apr 14 30 May 14 01 Jul 14 01 Aug 14

16

19

22

25

28

Jul 13 Oct 13 Jan 14 Apr 14 Jul 14

— EIA

aspHaLt and bitumen industry briefs

Suriname close to completing refinery expansionThe $900mn expansion of Surinamese state-run Staatsolie’s 7,000 b/d Tout Lui Faut refinery will be completed by September, bringing processing capacity to 15,000 b/d, the company says.

The existing crude units will be shut down, but will be restarted if there is need for more processing, Staatsolie says.

The expansion will allow the refinery to produce low sulfur diesel, gasoline, fuel oil and asphalt for the local market and sulfuric acid for export to the Caribbean, Staatsolie says.

The upgraded refinery will have a 15,000 bl vacuum tower and produce 8,000 b/d of diesel and 3,000 b/d of gasoline.

The expanded refinery will meet the country’s demand for diesel and asphalt, and just over two-thirds of its gasoline, the company says.

Staatsolie is looking to export some of the EU-quality diesel in French-controlled Martinique, Guadeloupe and French Guiana.

Italian engineering firm Saipem is carrying out the expansion under a $424mn contract.

Staatsolie is seeking to increase crude reserves by 80pc to 144mn bl while maintaining current production of 17,000 b/d for the next three years, the company says. Suriname produces oil from the onshore Tambaredjo and Calcutta fields.

Staatsolie recently awarded a contract to Trinidad s WSPC to drill nine exploration wells in shallow water Block 4, off the coast of Saramacca district.

Companies that have leased offshore blocks from Staatsolie include the UK’s Tullow Oil, US Kosmos, Chevron, US independent Apache and Malaysia’s state-controlled Petronas.

Suriname’s acreage is part of the Guianas Shield that runs from Venezuela to French Guiana, and which the US Geological Survey estimates could contain recoverable oil reserves over 13.6bn bl and gas reserves of 39 trillion ft3.

Crude

americas prices $/bl 31 Jul ± on week

WTI Cushing 98.17 -7.83WTI Midland 87.72 -3.02WTS Midland 90.67 -3.29ANS USWC 105.97 -0.90Mixed Sweet (MSW) 87.83 -3.00Lloyd Blend (pipeline) 75.20 -1.14Western Canadian Select (WCS) 75.45 -1.14Maya del USGC 91.90 -2.02

non-americas prices $/bl basis 31 Jul ± on week

Tapis 107.76 -1.32North Sea Dated 104.46 -1.32Dubai 104.67 -1.25Arab Heavy, fob Ras TanuraDifferential to Asia Oman/Dubai -2.80 0.00Differential to Europe Ice Bwave -8.40 0.00Differential to US ASCI -0.15 0.00Kuwait fobDifferential to Asia Oman/Dubai -0.40 0.00Urals NWE 103.46 -0.87Urals Med 104.56 -0.32

WTI - Lloyd Blend $/bl

Brent-WTI $/blUS end-of-week asphalt and road oil stocks mn bl



Higher Spanish construction tenders boost asphaltSpanish asphalt demand is set to rise as increases in construction tenders offered by state-controlled construction bodies and regional authorities help to offset the impact of the financial crisis.

Spain offered €1.54bn ($2bn) in tenders in May, a rise of 63pc on the same month a year previously when €944mn of tenders were released, according to data released by the country’s constructors federation Seopan.

Tenders offered by regional authorities were flat on the same month last year at around €171mn. But the country’s interior ministry boosted tenders to €891mn, up by 116pc from €412mn in the same month a year ago. Regional authorities have looked for bids for €893mn worth of construction contracts over the year to the end of May, up by 61pc from the first five months of 2013.

While Spanish construction tenders have risen in 2014 from the lows of 2012 and 2013, they are yet to get back to levels seen since the financial crisis hit the country. Some tenders offered by state-controlled construction firms and regional governments have also failed to be implemented after bids for contracts were accepted. The cash strapped authorities in the southern region of Andalusia recently cancelled a €307mn investment programme for two out of three planned motorway renovation and construction projects. The Andalusian constructors federation Ceacop called the decision by the regional government “a disaster.”

strabag signs for polish espresswayAustrian construction giant Strabag has signed a contract to build a stretch of the planned S7 expressway.

The ‘Trasa Nowohucka’ stretch will run between Rybitwy and Igolomska. The new section will form part of the expressway that is planned to link Gdansk in the north and Rabka-Zdrój in the south of Poland. In three years’ time, the new section is intended to absorb traffic from national road 79 and funnel it to the A4 motorway between Katowice and Rzeszow.

The construction site is scheduled to be handed over this month, and constructions are planned to start in August/September. Under the contract, which is worth PLN 529mn (around €130mn), the consortium agreed to perform the following tasks: construction and renovation of the traffic infrastructure with a total length of 18.6km, including the 4.5km long expressway with two carriageways consisting of three lane each. The national road 79 with a length of 1.6km, the construction of on-and-off ramps as well as six flyovers and five bridges. Furthermore, the tram lines will be modernised.

oiL industry briefs

Signs of spending revival in NigeriaInvestment uncertainty in Nigeria caused by the government’s failure to pass its long-delayed petroleum industry bill and increased oil theft and insecurity in the Niger delta has deterred upstream spending by the country’s main foreign partners. But some projects are progressing, despite the sharp slowdown.

Shell, Total, Chevron, Italy’s Eni and US company ConocoPhillips have sold upstream assets as onshore and shallow-water fields become uneconomic. Exploration and development in Africa’s largest oil exporter has been declining since 2006.

But Shell is aiming to make a final investment decision on its 225,000 b/d Bonga Southwest offshore project by the end of this year. First production from the project in block 118 is expected in 2020 and estimated development costs are put in excess of $12bn. Bonga Southwest was discovered in 2001 but initial engineering and design only began last year. The project is expected to include Chevron’s undeveloped Aparo field.

Shell plans to bring the 45,000 b/d Bonga Northwest field into production at the end of this year. The 100,000 b/d Bonga North project is under evaluation for development. Other projects being carried out by Shell include the 90,000 b/d of oil equivalent (boe/d) Forcados Yokri and the 85,000 boe/d Southern Swamp Associated Gas Solutions schemes.

These last two projects are focused on increasing gas supply to the Nigerian market. A final investment decision was made last year on the $2.4bn, 215,000 boe/d Gbaran-Ubie phase 2 project, which will increase gas supply to the 22mn t/yr Nigeria LNG plant on Bonny island. And Shell is working on the $1.1bn Trans Niger loop line project to remedy pipeline losses caused by vandalism.

ExxonMobil awarded the main contracts for the 60,000 boe/d offshore Erha North phase 2 project last year. And the firm is carrying out development drilling at the 80,000 b/d Satellite project. But uncertainty over future fiscal and other operating terms have held up investment decisions on the key 140,000 b/d Bosi and 110,000 b/d Uge field developments.

Total aims to bring the 200,000 b/d offshore Egina field in block 130 on stream at the end of 2017 after it took a final investment decision last year. The second phase of Total’s Ofon project is scheduled to start up this year, lifting output to 90,000 boe/d from 30,000 boe/d. And Total plans to boost capacity at the 180,000 b/d Usan field by 50,000 b/d from 2016, although it has recently tried to sell its 20pc stake in Usan.

Venezuela swims against the tideVenezuela is moving away from the downstream. Growing trade links with Asia-Pacific buyers, particularly China, are prompting the change as state-owned oil firm PdV struggles to maintain crude production. But Caracas is swimming against



the tide of other Opec members in the Mideast Gulf that are building up their products export capacity. The shift has implications for Opec output policy.

PdV is trying to sell its US refineries, around 25 years after acquiring them. The firm has 850,000 b/d of operational capacity in the US, which it mostly controls through its Citgo subsidiary, as well as through a joint venture with ExxonMobil. PdV began stripping away its downstream assets when it sold its 50pc stake in German refiner Ruhr Oel — 234,000 b/d of net capacity — to Russia’s Rosneft in 2010. But a new round of trade deals between Caracas and Beijing has left PdV with more commitments to supply crude to China.

Venezuela already supplies 600,000 b/d to China under oil-backed loan deals. Roughly half of this reaches China as crude, 100,000 b/d as straight-run fuel oil for upgrading in independent Chinese refineries or to use as bunker fuel, and the rest is resold by Chinese firms. PdV has pledged to increase oil sales to China to 1mn b/d in 2016.

The firm has been diverting crude from the US to supply Asia-Pacific markets for a number of years. It has cut runs of Venezuelan crude at its US refineries by 160,000 b/d since 2010, matching the increase in Chinese imports over the same period. It would have to cut all its remaining US crude exports and stop the roughly 200,000 b/d of subsidised sales in the Americas under the PetroCaribe scheme to fully meet its 2016 export target to China.

In contrast to PdV’s strategy, Saudi Aramco is adding 900,000 b/d of net refining capacity over the next three years through stakes in new refineries at Jubail, Yanbu and Jizan. The UAE will have another 600,000 b/d of refining capacity at Ruwais and Fujairah over the next two years. Kuwait’s KPC plans to build 680,000 b/d of capacity by 2019, although its commitment to Sinopec’s 300,000 b/d Zhanjiang refinery project in southern China appears to have waned.

Venezuela is a founding member of Opec. But for many years, especially before the Bolivarian revolution of the late Hugo Chavez, it was less than enthusiastic about curbing production. Caracas was keen that it should not be thought of as similar to Mideast Gulf Opec members. It kept supplying oil to the US during the Arab oil embargo in 1973. And PdV’s policy in the 1990s of refining more crude than it produced helped maintain its perverse attitude towards Opec. Its short crude position discouraged it from actions to prop up prices.

Ultimately, when crude fell to $10/bl in the late 1990s, Caracas realised that its perspective was flawed — lower crude prices meant lower product revenues. It reversed policy when it joined long-haul exporter Saudi Arabia and non-Opec Mexico, another short-haul supplier of heavy sour crude to the US, in the Riyadh pact of March 1998. But the elements that made the Riyadh pact logical are no longer in place. Saudi Arabia, Kuwait and the UAE are building bigger downstream

profiles. Venezuela is retreating from its advantaged position as a short-haul supplier to the US, turning instead to long-haul exports to China under soft financial terms. The outlook for Opec output policy has fundamentally changed.

Concerns over rosneft sanctionsNew US and EU sanctions against Russian state-controlled producer Rosneft are beginning to make counterparties and trade financiers nervous.

Japanese buyers of Russian ESPO Blend have pulled out of a Rosneft tender, apparently because of uncertainty over the implications of US and EU sanctions against the company. A trading firm confirms that it was unable to participate in the Rosneft tender for up to 125,000 b/d of September-loading ESPO Blend after Credit Agricole, Sumitomo Banking and Bank of Tokyo-Mitsubishi UFJ turned down its requests for letters of credit. And other market participants say they have struggled to secure letters of credit with France’s BNP Paribas and HSBC when looking to buy Rosneft crude.

The US and EU imposed new sanctions over Russia’s involvement in Ukraine after the shooting down of Malaysian Airlines flight MH17. These include measures that seek to limit Rosneft’s access to loans of more than 90 days’ duration. The restrictions do not extend to buyers of Russian crude. But uncertainty surrounding current and future sanctions is prompting precautionary reactions by trade financing banks, as well as by Rosneft itself.

Market participants say Rosneft is instructing customers to keep the validity period for any letters of credit at no more than 89 days, one day short of the limit under sanctions. BNP Paribas has issued its own guidance to customers buying from Rosneft and Russia’s leading independent gas producer Novatek, market participants say, although this could not be confirmed.

If Japanese companies shun future tenders, it could signal a major change to the ESPO Blend landscape. Over 170,000 b/d of the nearly 500,000 b/d of ESPO Blend that loaded in July went to Japanese buyers. JX Nippon alone took 125,000 b/d. The company was the main buyer of the Russian crude in the first half of this year, taking cargoes for its 127,000 b/d Marifu and 180,000 b/d Muroran refineries.

Refiners have become more active participants in ESPO Blend sale tenders over the past year, as the market has become more transparent. But if some refiners shy away from spot tenders because of sanctions, trading companies such as Glencore and Vitol could try to take on larger positions.

Uncertainty over financing could prove to be a stumbling block for Rosneft in the near future. The company is expected to announce a six-month tender to sell Urals cargoes loading from Baltic and Black Sea ports for October 2014-March 2015. Term pre-financing deals with Rosneft, which require billions of dollars upfront, are no longer possible as the lines of credit required for such deals breach the current 89-day limit, market participants say.

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The EU agreed on 29 July to restrict Russian access to EU capital markets and oil sector technology for shale oil, deepwater and Arctic projects. The US announced similar sanctions the same day. Rosneft has reiterated plans to start exploration drilling in the Kara Sea with partner ExxonMobil in August. A vessel that will be used to conduct a seismic survey to identify promising areas is in Russian waters and heading towards the Kara Sea blocks, the firm said on 25 July.

Rosneft may have to delay some projects because of the new sanctions. The measures seem designed primarily to target its offshore and shale activities. The firm dominates Arctic exploration in Russia and is active in onshore tight oil exploration. “We do work in various conditions and we are ready to face volatility associated with these sanctions,” chief executive Igor Sechin says. Rosneft will keep working, but some projects will be “moved”, he says.

WTI tumbles below $100/bl Oil prices are down, as geopolitical concerns recede and US inventories rise.

Atlantic basin benchmark North Sea Dated fell by $1.32/ bl to $104.46/bl in the week to 31 July, while US marker September WTI dropped by $3.90/bl to $98.17/bl, its lowest since March, as refinery shutdowns hit midcontinent demand. WTI was down by $7.83/bl on a front-month basis, after August expired.

Sour crudes firmed relative to sweeter grades, especially in the Mediterranean market. Russian medium sour Urals was

supported by expectations of lower exports, while reduced Iraqi Basrah Light sales and the absence of Iraq’s Kirkuk further underpinned values.

A growing proportion of US Gulf coast product exports are heading to Latin America rather than Europe. The Colonial pipeline is running at capacity and shipping costs from Europe are significantly lower than the price of chartering a Jones Act-compliant vessel to bring cargoes from the Gulf coast, leaving the way open for European shipments to move to the Atlantic coast.

High Gulf coast refinery run rates depressed local product prices relative to the rest of the country, creating trading opportunities. The cost of capacity on the Colonial pipeline rose to its highest since May. Increased amounts of products are heading to the midcontinent, after a fire and shutdown at CVR Energy’s 115,000 b/d Coffeyville refinery in Kansas and the start of maintenance at Phillips 66’s 356,000 b/d Wood River, Illinois, plant.

Heavy falls in US midcontinent crude prices reflect the region’s fragile supply-demand balance. Front-month WTI has lost over $6.50/bl against North Sea Dated since 24 July, turning a small premium into a hefty discount. This week’s WTI falls are partly the result of the Coffeyville refinery fire, which is likely to keep the plant shut for four weeks, cutting demand for midcontinent crude.

But WTI remains in backwardation amid low stocks at the pricing hub of Cushing, Oklahoma, as increased pipeline capacity to the Gulf coast has drained crude tanks in the midcontinent. This backwardation should continue to ease as stocks build, refineries go into turnaround and new pipelines bring more crude to Cushing.

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Argus Asphalt Report - argusmedia.com/media/files/pdfs/samples/argus-asphalt.pdf · Argus Asphalt Report Contents Summary 1 Global bitumen wholesale prices 2 US and Canada 3-7 East