Argus Asphalt Report

Copyright © 2015 Argus Media Inc.

Argus Asphalt Report

Attention: Effective 23 January, Argus will split Argus Asphalt Report into two new reports - Argus Americas Asphalt and Argus Bitumen. Current subscribers will have access to both reports. For further information, contact your local Argus sales office or email [email protected].

Contents

Global asphalt markets 2North America 3-7Europe-Africa 8Asia-Pacific 11News 17Argus Media contact information 19

Issue 15-2 | Friday 16 January 2015

Key PriCes

AsphaltLow High ±

Waterborne, fob $/stNew Jersey 280 345 -8US Gulf 280 325 -13US midcontinent 300 325 -8Waterborne, fob $/tBandar Abbas 335 360 -3Singapore 365 375 -10Spain 175 185 -10Greece 175 185 -10Rack $/tNew York City $/st 545 560 0Houston $/st 495 505 -13Chicago $/st 505 515 0Los Angeles $/st 485 495 0Singapore: pen 60/70 470 475 -100Mumbai 594 627 +12Rotterdam 306 324 -4Indonesia 532 532 -46Southern UK 486 508 -1Southwest Spain 394 418 -5Economics Mid ±Bitumen’s value as a fuel oil blendstock, Singapore $/t 235 -2Bitumen’s value as a fuel oil blendstock, Med $/t 158 -8Asphalt’s value as a fuel oil blendstock, Los Angeles $/st 203 -7Asphalt’s value as a fuel oil blendstock, US Gulf $/st 169 -8Asphalt’s value as a fuel oil blendstock, New York $/st 175 +1

Crude and refined productsLow High ±

Crude $/blDubai fob Dubai 41.95 45.45 -5.44Iran Heavy fob Sidi Kerir 43.05 45.81 -2.80WCS month 1 32.82 36.68 +0.21Refined productsFuel oil HS 380cst fob Singapore $/t 258.75 275.50 -7.63Fuel oil 3.5pc S RMG barge NWE $/t 226.25 238.25 -9.13Fuel oil No 6 3% S fob US Gulf $/bl 31.85 41.85 -1.80

summAry

Asphalt prices continued to slide, as recent losses in the crude markets continued to make their way downstream.

Atlantic coast asphalt mimicked crude’s volatility, with deals done in an unusually wide range. Waterborne PG 64-22 was heard sold at $280/st and $345/st fob equivalent, the widest range of prices seen since August 2012.

Gulf coast prices continued to slide, amid tepid demand and softening crude markets. Domestic buyers were hesitant to pick up fresh material in case prices continue to drop. Bulk asphalt sales were heard at $290-325/st fob US Gulf, with indications much lower and clear pressure on prices.

The onset of some unseasonably warm weather could thaw midcontinent racks, just a week after freezing temperatures damaged multiple refineries across the region. Three crude distillation units were brought down by freezing temperature s at BP’s 410,000bl/d refinery in Whiting, Indiana.

Rockies rail prices remained at a premium to the rest of the country, with little competition from European refiners. Railed material was heard trading at $320-340/st fob rail. Higher-priced material was also heard available at a Colorado refinery, but no actual deals were heard.

Canadian buyers maintained a piecemeal approach to purchasing, waiting for crude and asphalt prices to bottom out. Distributors were holding onto material that had been originally purchased at a wide range of prices. That could lead to a gradual drop in prices as they work through the higher priced material.

Paving season kicked off through much of Latin America

Page 2 of 21Copyright © 2015 Argus Media Inc.

Argus Asphalt Report Issue 15-2 | Friday 16 January 2015

WAterborne AsPHALt PriCes, fob

Upcoming Argus asphalt/bitumen conferences:

2nd Argus Africa Bitumen 2015Dar es Salaam, Tanzania, 4-5 February

Argus Americas Asphalt Summit 2015Miami, Florida, 24-26 March

Argus Europe Bitumen 2015Istanbul, Turkey, 10-11 June

this month, with several import cargoes delivered into the region. Two large cargoes arrived into Chile from the United States and Spain. Freight costs from Tarragona, Spain into Puerto Ventanas, Chile are currently running at around $120/st.

Northwest European prices were still under pressure, but mostly held steady, although demand remained at low levels. Asphalt mixing and other bitumen converting units were either still shut for traditional winter maintenance.

Assessed prices in the UK were unchanged at £320-335/t ex-refinery/terminal and £330-350/t delivered for domestic sales. The bulk of January contractual negotiations were now thought to have been completed with major suppliers managing to resist significant price reductions.

A slight increase in spot shipping enquiries was noted in the Mediterranean region, but few translated into actual fixtures. Among these were notional interests for exports from Italy to north Africa and Portugal to west Africa.

Prices for drummed Iranian cargoes to key east African ports were ranged in the high $300s/t to low $400s/t fob Bandar Abbas range. Although a significant increase in Kenyan

demand is forecast for this year, market participants said this has yet to materialise in the form of increased imports.

There was a distinct lull in spot demand from Nigeria despite this being the dry season, attributed by traders to uncertainties about the outcome of next month’s presidential elections. Spanish export price discounts to fob Mediterranean fuel oil stayed at around $30/t, fob basis Tarragona, while typical freight rates for 5,000t cargoes to Nigerian ports were still pegged around the $130/t level.

Bahrain

$425-425/t

Bandar Abbas

$335-360/t

Eastern US Gulf

$309-358/t

$280-325/st

Greece

$175-185/t

Italy

$165-175/t

Ivory Coast

$235-240/t

New Jersey

$309-380/t

$280-345/st Rayong

$355-365/t

Rotterdam

$197-207/t

Singapore

$365-375/t

South Korea

$325-335/t

Spain

$175-185/t

Taiwan

$360-370/t

Western US Gulf

$309-358/t

$280-325/st



Asphalt, 10-16 Jan $/stLow High ±

Waterborne, fob

New Jersey 280 345 -7.5

Waterborne, cif

New York 290 355 -12.5

New England 300 365 -15

Rack

Southwest Maine 575 585 0

Greater Boston 575 585 0

Connecticut 545 570 0

Albany 555 565 0

Western NY/Western PA 480 540 -10

New York City 545 560 0

Philadelphia 530 555 0

Baltimore 530 555 0

Southeast Virginia 535 560 0

Coastal Carolinas 530 550 0

Inland North Carolina 535 555 0

Atlanta 500 505 0

Coastal Georgia and NE Florida 510 530 -15

Miami 510 520 0

Economics Mid ±

Asphalt’s value as a fuel oil blendstock, NYH 175 1.17

Refined products, 10-16 JanLow High ±

Fuel oil No 6 3% NYH $/bl 38.10 40.20 -0.65

Heating Oil 2,000ppm NYH delivered ¢/USG 157.58 161.41 -8.71

us AtLAntiC CoAst

Atlantic coast asphalt mimicked crude’s volatility, with deals done in an unusually wide range.

Waterborne PG 64-22 was heard sold at $280/st and $345/st fob equivalent, the widest range of prices seen since August 2012. But demand appeared to be improving, and increased liquidity in the bulk markets could tighten bid-ask spreads over the coming week.

Despite poor paving demand and falling crude, asphalt continued to transact at elevated levels. One supplier sold almost 18,000st of PG 64-22 at $340-350/st fob mid-Atlantic.

A slew of imports from Venezuela and Spain continued to exert downward pressure on the market, forcing local refiners to drop their asking prices. Two Mediterranean loads were delivered into the Atlantic coast over the week. A 45,000dwt vessel delivered a partial cargo into south Florida before moving on to the Panama Canal. A second, smaller vessel appeared to be offloading in Baltimore on Friday. European asphalt has had a significant impact on the US market since an arbitrage opened up last summer. Year-on-year Spanish refining runs were up 13pc in October and 12pc November.

Multiple Atlantic coast suppliers reported having low inventories and were in the process of structuring deals for February product, although firm pricing was still unclear. Some were expecting the market to be short heading into summer, particularly if export volumes from Europe start to slow.

US refiners continued to export, with one oceangoing vessel seen outside Paulsboro this week. That would suggest US Atlantic coast prices are competitive with levels in Europe and Venezuela, at least for shipments into some markets.

Attention: In order to better reflect pricing in western New York and Pennsylvania, Argus is proposing:• To add Buffalo to the list of rack locations that its Western NY/Western PA rack assessment representsArgus will be accepting comments on this change up to 31 January. To comment on this proposal, please contact Omar Rahman at [email protected] or + 1 646 376 6140. Formal comments should be marked as such and may be submitted via email to [email protected] or by post to Omar Rahman, Argus Media Inc, 500 Fifth Avenue, Suite 2410, New York, NY 10110 and received by 31 January, 2015. Please note, formal comments will be published after the consultation period unless confidentiality is specifically requested.

Rack prices were stable in most markets along the eastern seaboard. Strength at the rack has left retail prices at a widening premium to bulk values, with the former showing a considerable lag. Inventory at truck-loading racks across the region was purchased at a considerably higher price than the current bulk market, and distributors have proven unwilling to drop their sales prices in line with replacement costs. Given the lack of paving activity in the winter, it may take some time before high-priced material can be worked through.

In western Pennsylvania and New York, racks peeled off to $480/st for PG 64-22. Freezing rain in the southeast hurt rack demand and stiff competition in some Florida markets led to a drop at local racks. Jacksonville racks fell to $510-530/st for PG 64-22. The Florida DoT asphalt index dropped just over $18/st in January to $553.07/st for unmodified binders of PG 67 or below.

Correction: Correcting the 9 January issue of Argus Asphalt Report, the New York Department of Transportation’s asphalt index dropped from $609/st in December to $600/st in January.




Waterborne, fob

Eastern US Gulf 280 325 -13

Western US Gulf 280 325 -13

US Gulf 280 325 -13

Rack

Gulf coast Florida 495 505 -10

Northern Alabama 495 505 0

Mobile 495 505 0

Southeast Louisiana 525 530 -3

Mississippi 515 525 0

Houston 495 505 -13

Northeast Texas 520 530 -5

Economics Mid ±

Asphalt’s value as a fuel oil blendstock, US Gulf 169 -8

Crude and refined products, 10-16 JanLow High ±

Crude $/bl

Maya 37.74 39.75 -1.56

WTS 43.54 46.53 -1.00

Refined products

Fuel oil No 6 3pc S fob $/bl 31.85 41.85 -1.80

Heating oil 2,000ppm fob ¢/USG 140.58 147.06 -7.27

Value as asphalt vs value as fuel oil blendstock $/st Eastern US Gulf less New Jersey waterborne $/st

100

200

300

400

500

600

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Eastern US Gulf waterborneValue as fuel oil blendstock

-40

-30

-20

-10

0

10

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

us GuLf

Gulf coast prices continued to slide, amid tepid demand and softening crude markets.

Some domestic buyers were hesitant to pick up fresh material in case prices continue to drop. Bulk asphalt sales were heard at $290-325/st fob US Gulf, with indications much lower and clear pressure on prices. Cargoes were sold for export and domestic markets. Off-spec material was said to be selling in the low $200s/st.

Heavy sour crude firmed at the Gulf, amid fears that freezing temperatures could shut in production of West Texas Sour. Mexican Maya rose by more than a dollar against Light Louisiana Sweet. Traders continued to pile crude into US tank farms, taking advantage of a deep market contango and lucrative storage economics. Heightened demand for storage and refining forced Western Canadian Select (WCS) higher against WTI in both Cushing and Alberta.

Export vessels were seen loading out of the Gulf coast, suggesting that the some refiners were willing to sell at levels competitive with cheap European material. One 6,000dwt vessel was seen loading in Corpus Christi headed to Doc Bocas, Mexico with an arrival during the weekend. Mexican state-run refiner Pemex currently lists asphalt from its refineries at an average of $738/t.

Attention: Following a 30-day consultation, Argus will discontinue publication of Asphalt (bitumen) USGC east fob (PA0000614) and Asphalt (bitumen) USGC west fob. The last assessment will be published on 16 January 2015. Please note that Argus will continue to publish Asphalt (bitumen) fob US Gulf (PA0015105), which reflects waterborne asphalt trade along both the eastern and western stretches of the US Gulf.To comment, please contact Omar Rahman at [email protected] or + 1 646 376 6140.

Despite the drop in bulk markets, rack prices were stable throughout the Gulf region after major price cuts were made the previous week. Most racks were selling at around $500/st for PG 64-22.

Heavy-light crude differentials between heavy Maya on the Gulf coast and Light Louisiana Sweet (LLS), have remained fairly steady for the last few weeks, while WTI-WCS at Cushing has narrowed slightly.




Waterborne, fob

Asphalt 300 325 -8

Roofing flux 445 455 0

Rail, fob

Asphalt 300 325 -8

Roofing flux 445 455 0

Rack

North Dakota 520 540 0

Chicago metropolitan area 505 515 0

Northern Minnesota/Northern Wisconsin 510 550 0

Southern Minnesota/Southern Wisconsin 510 560 0

Southeast Michigan 525 550 0

Indianapolis 510 550 0

Ohio 545 550 0

Kansas City 525 535 -18

Tulsa 500 510 -15

St Louis 550 560 0

Southern Kentucky/Tennessee 535 575 0

Omaha 525 535 -18

250

300

350

400

450

500

550

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Eastern US Gulf waterborneMidcontinent asphalt waterborne

200

300

400

500

600

700

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Chicago rack Midcontinent asphalt waterborne

Gulf coast barges vs midcontinent barges $/st Chicago rack vs midcontinent barges $/st

us midContinent

The onset of some unseasonably warm weather could thaw midcontinent racks, just a week after freezing temperatures damaged multiple refineries across the region.

Three crude distillation units were brought down by freezing temperature s at BP’s 410,000bl/d refinery in Whiting, Indiana. Marathon also reported trouble last week with a gasoline-producing unit due to freezing conditions at its 78,000bl/d refinery in Canton, Ohio. Operations were shut this week at Husky’s 170,000 bl/d refinery in Lima, Ohio after an explosion and fire on 10 January.

Some refiners in the region said they were moving most of their asphalt production into their own terminals as prices

Attention: Following a 30-day consultation, Argus will discontinue publication of Asphalt (bitumen) rack North Dakota (code PA0000648). The last assessment will be published on 16 January 2015. To comment, please contact Omar Rahman at [email protected] or + 1 646 376 6140.

Attention: In order to better reflect distinct pricing environments in the US Midcontinent, Argus is proposing:1. To stop reflecting Cincinnati in its Ohio rack assessment2. To rename its Ohio rack assessment as “Northern Ohio”3. To initiate a new “Mid-Ohio River” rack assessment that reflects rack prices at Louisville, Cincinnati, and Catlettsburg Argus will be accepting comments on this change up to 31 January. To comment on this proposal, please contact Omar Rahman at [email protected] or + 1 646 376 6140. Formal comments should be marked as such and may be submitted via email to [email protected] or by post to Omar Rahman, Argus Media Inc, 500 Fifth Avenue, Suite 2410, New York, NY 10110 and received by 31 January, 2015. Please note, formal comments will be published after the consultation period unless confidentiality is specifically requested.

are still low, and storage costs have shrunk along with energy costs.

Bulk pricing remained at the low end of last week’s ranges for waterborne and railed material. Deals were heard done at $300-325/st for PG 64-22. Prices are facing downward pressure heading into February, according to several suppliers.

Eastern and central Canadian buyers were in the market for bulk material out of the midcontinent.

Rack prices were largely unchanged, and demand minimal. Downward movement did occur in Tulsa and Kansas City, with prices at $500-510/st and $525-535/st for PG 64-22, respectively.




Rail, fob

Rockies 320 340 -23

Rack

Phoenix 525 535 0

Bakersfield 485 495 0

San Francisco Bay Area 475 485 0

Los Angeles 485 495 0

Denver 495 505 0

Portland 575 590 0

Montana 500 510 0

Las Vegas 550 600 0

Salt Lake City 510 525 0

Wyoming 470 480 0

Economics Mid ±

Asphalt’s value as a fuel oil blendstock, Los Angeles 203 -7

Crude and refined products, 10-16 JanLow High ±

Crude $/bl

ANS USWC month 1 47.53 49.71 -2.54

Refined products

Fuel oil bunker 380cst Los Angeles $/t 259.00 283.00 -11.50

Diesel EPA 10ppm Los Angeles pipeline ¢/USG 147.83 151.91 -11.34

300

350

400

450

500

550

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Rockies rail Midcontinent waterborne

490

500

510

520

530

540

550

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Montana Denver

Rockies rail and midcontinent barges $/st Rocky mountain rack prices $/st

us West CoAst And roCKy mountAins

Rockies rail prices remained at a premium to the rest of the country, without competition from European refiners.

Railed material was heard trading at $320-340/st fob rail. Higher-priced material was also heard available at a Colorado refinery, but no actual deals were heard.

A lack of liquidity and transparency continued to hamper price discovery in the Rockies, as winter doldrums have set in and buyers outside the region are able to source cheaper material elsewhere. Refiners have also been busy stocking their own terminals with material.

Market participants on the West coast said more railcars had become available in the last 30 days compared to the same time last year, which may be a result of less demand for crude movements.

In the northwest, rack prices in Seattle and Portland held at previous levels, although participants in both markets

Attention: In order to better reflect pricing in Montana, Argus is proposing:• To add Laurel to the list of rack locations that its Montana rack assessment representsArgus will be accepting comments on this change up to 31 January. To comment on this proposal, please contact Omar Rahman at [email protected] or + 1 646 376 6140. Formal comments should be marked as such and may be submitted via email to [email protected] or by post to Omar Rahman, Argus Media Inc, 500 Fifth Avenue, Suite 2410, New York, NY 10110 and received by 31 January, 2015. Please note, formal comments will be published after the consultation period unless confidentiality is specifically requested.

expected cuts in the coming weeks. Seattle/Tacoma racks were priced at $525/st for PG 64-22, while Portland remained at $575-590/st for the same grade.

Rack prices in California moved down considerably last week, but held their values this week. The Bay Area racks sold material at $475-485/st for PG 64-10 and 64-16. In Los Angeles, rack sales were transacted at $585-595/st for PG 64-10 and $500/st for 70-10.



Asphalt, 10-16 JanC$/t $/st

Low High ± Low High ±

Rack

Alberta 550 605 0 418 460 -5

British Columbia 565 625 0 430 475 -5

Toronto 730 765 0 555 582 -6

Montreal 730 770 0 555 586 -6

Saskatchewan 635 665 0 483 506 -5

Manitoba 680 690 0 517 525 -6

Mid ± Mid ±

Husky, posted, effective 18 Mar*

Edmonton: pen 150/200A 655 0 549 -6

Vancouver: pen 80/100A 710 0 595 -7

Prince George: pen 150/200A 730 0 612 -7

Kamloops: pen 150/200A 720 0 604 -6

Winnipeg: pen 150/200A 710 0 595 -7

Kildair, Sorel-Tracy, posted, effective 1 Nov*

PG 58-28 788 0 661 -7

PG 64-28 828 0 694 -8

PG 58-34 878 0 736 -8

PG 64-34 938 0 786 -9

PG 70-28 938 0 786 -9

Suncor, Montreal, posted, effective 1 Nov*

PG 58-28 785 0 658 -7

*posted in C$/t

Crude, 10-16 Jan $/blLow High ±

WCS month 1 32.82 36.68 +0.21

570

580

590

600

610

620

630

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

700

720

740

760

780

800

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Montreal Toronto

Alberta C$/t Montreal and Toronto C$/t

CAnAdA

Canadian buyers maintained a piecemeal approach to purchasing, waiting for crude and asphalt prices to bottom out.

Distributors were holding onto material that had been originally purchased at a wide range of prices. That could lead to a gradual drop in prices, as they work through the higher priced material when paving activity restarts in the spring.

Canadian refiners were said to be selling at a slight premium to their American counterparts on a US dollar basis, lending potential support to the Alberta market.

In western Canada, Mixed Sweet Blend (MSW) fell against heavy crude Western Canadian Select (WCS), with the spread narrowing to $5.84/bl on 13 January, the smallest differential since May 2009. The discount for WCS has narrowed as the basis has fallen. In addition, takeaway capacity for heavy crude is set to rise in March when a 210,000 b/d rail terminal in Edmonton, Alberta, comes online to serve Imperial Oil’s Kearl oil sands facility.



Asphalt, 10-16 Jan

Local currency/t $/t


Rack

Antwerp € 260 275 0 306 324 -4

Rotterdam € 260 275 0 306 324 -4

Northern Germany € 295 305 -10 347 359 -16

Northeast Germany € 290 300 -15 341 353 -22

Southern Germany € 295 305 -20 347 359 -28

Southwest Germany € 290 300 -15 341 353 -22

West Germany € 295 305 -20 347 359 -28

Northeast Spain € 360 370 0 424 435 -6

Southwest Spain € 335 355 0 394 418 -5

Italy € 370 380 0 435 447 -5

South Africa rand 5,000 5,300 0 435 461 +7

Southern UK £ 320 335 0 486 508 -1

Delivered by truck

Southern UK £ 330 350 0 501 531 -1

Brussels € 265 280 0 312 329 -4

Northern France € 340 350 0 400 412 -5

Central France € 345 355 0 406 418 -5

Southern France € 350 360 0 412 424 -5

Waterborne, fob Differential to HSFO $/t Outright price $/t

Rotterdam -35 -25 0 197 207 -9

Spain -35 -25 0 175 185 -10

Italy -45 -35 0 165 175 -10

Greece -35 -25 0 175 185 -10

Ivory Coast +25 +30 0 235 240 -10

Waterborne, cfr Outright price $/t

West Africa 290 320 0

Economics Mid ±

Bitumen’s value as a fuel oil blendstock, Med 158 -8

Crude and refined products, 10-16 Jan

Low High ±

Crude $/bl

Basrah Light fob Sidi Kerir 39.65 41.96 -3.08

Urals cif Rotterdam 43.45 46.06 -2.58

Iran Heavy fob Sidi Kerir 43.05 45.81 -2.80

Refined products, NWE $/t

Fuel oil 3.5%S RMG barge 226.25 238.25 -9.13

Fuel oil straight-run 0.5% fob 277.50 304.25 -17.50

Fuel oil straight run M-100 cif 235.25 246.25 -9.13

VGO 0.5% barge 332.25 357.25 -9.13

Refined products, West Mediterranean $/t

Fuel oil 3.5% 0.998 fob 203.50 215.50 -10.13

VGO 0.5% fob 325.25 350.25 -12.63

Gasoil heating oil French W Med fob 438.00 454.00 -22.13

EURopE-AFRICA

northwest europePrices were still under pressure, but mostly held steady, although demand remained at low levels.

Asphalt mixing and other bitumen converting units were either still shut for traditional winter maintenance or running at low rates because of limited end-user requirements. Road maintenance activities were higher in areas where weather conditions have been favourable. High-sulphur fuel oil barge prices stood at $236.25/t fob Rotterdam on 15 January, down slightly from $237.25/t on 9 January. The 9-15 January daily average stood at $233.25/t, less by $86/t (€74/t) from the 9-15 December average.

uKAssessed prices in the UK were unchanged at £320-335/t ex-refinery/terminal and £330-350/t delivered for domestic sales.

The bulk of January contractual negotiations were now thought to have been completed with major suppliers managing to resist significant price reductions. According to some market participants, construction activity has got off to a decent start this year, despite the recent spell of rain and snow. The volume of demand remains high for this time of the year, as local authorities carry out maintenance on motorway and local road networks. A new 20,000t storage terminal, developed jointly between Trafigura and bulk transport and storage operator Stolt-Nielsen, is still expected to start in the middle of the year, despite some speculation that it may commence sooner.

beneluxA lack of demand from construction projects and the usual seasonal slowdown led to little demand from Benelux countries.

Few deals have been done and prices were said to be unchanged, following sharp falls last week. Domestic price assessments were said to be around €260-275/t ex-refinery Rotterdam and Antwerp, although that level could weaken once further trade emerges, market participants said. Volumes may start to tick higher in the coming weeks as some gradual re-opening of asphalt mixing plants takes place, expected from the latter part of this month.

GermanyAs was widely expected, prices in Germany lost further



-100

-50

0

50

100

31 Jan 14 23 May 14 12 Sep 14 16 Jan 15

Rotterdam SpainItaly GreeceIvory Coast

0

50

100

150

200

250

300

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

EURopE-AFRICA

Waterborne markets, differential to HSFO $/t Italy rack less bitumen fuel oil blendstock value $/t

ground, weighed down by a combination of low seasonal demand and crude-led falls in feedstock HSFO values.

Assessed domestic price levels were down by around €10-20/t. This is on top of the €40-50/t fall which came into effect from 1 January. Some buyers were said to have achieved price decreases of around €80/t from December’s level.

Market participants are not ruling out further decreases as demand is unlikely to pick up anytime soon. The majority of asphalt mixing and bitumen converting units are not scheduled to restart until March.

Consumption levels hovered at low levels, with offtakes from some refineries estimated at around 10pc of what it would be in normal summer months.

FrancePrices for domestic sales of standard penetration grades of bitumen were steady at €340-350/t in the north and €350-360/t in the south of the country.

Like other northwest European markets, activity was capped by traditional winter maintenance at asphalt mixing plants.

Central europe/balkansA picture of minimal demand and continued price pressure emerged this week. Major regional producers uniformly expect the malaise to persist at least through to the end of this month.

Sharply lower HSFO prices contributed to further price falls. Export offers from Hungary were down to around €320/t ex-refinery. Its previous offer levels were €350-360/t.

Activity in the Czech Republic and Slovakian markets were kept afloat mainly by the industrial sector which is taking small volumes. But a milder than usual winter has raised hopes that some mixing plants may start up earlier than March.

In Bulgaria, the Burgas refinery bitumen production units were still thought to be shut. The absence of its supply has had limited impact on the domestic market, which remains dormant.

mediterraneanA slight increase in spot shipping enquiries was noted in the Mediterranean region, but few translated into actual fixtures.

Among these were notional interests for exports from Italy to north Africa and Portugal to west Africa. No exports were forthcoming from Morocco this month owing to a month-long refinery shutdown which began on 25 December. Spot export availability in February remained to be seen, although unconfirmed reports that these volumes have already been committed could not be confirmed.

Trading and shipping sources alike attributed the dearth of spot business to heightened cautiousness on the part of potential buyers’ in the face of plummeting oil prices.

Cargo movements in the region were mainly bound for the Egyptian port of Alexandria - a result of EGPC’s tender to buy 10 cargoes this quarter. Cargoes are also moving regularly from Spain to Algeria. As reported last week, Spanish oil refiner Cepsa and Shell won the annual Sonatrach tender to supply Algeria with 200,000t and 50,000t of Pen 40/50 bitumen respectively into Algerian ports during the course of 2015.



100

200

300

400

500

600

700

800

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

West Africa waterborne, cfr Med HSFO

450

500

550

600

650

700

750

800

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

EURopE-AFRICA

Asphalt del West Africa and fuel oil fob Med $/t Southern UK rack $/t

Saudi Arabia is also continuing to draw product from the Mediterranean as the Middle Eastern countries continue with its vast spending on infrastructure projects.

Export price discounts to regional fuel oil quotes were maintained notionally at $30/t for Spanish and Greek exports and around $40/t for Italian exports.

On the shipping front, an oil major is seeking a 6,000-9,000t bitumen vessel for 12 options 12 months’ time charter in the Mediterranean starting in mid-March.

East AfricaPrices for drummed Iranian cargoes to key east African ports were ranged in the high $300s/t to low $400s/t fob Bandar Abbas range.

Although a significant increase in Kenyan demand is forecast for this year, market participants said this has yet to materialise in the form of increased imports.

Traders active in the Iran-east African market reported little appetite for storage buying, resulting in a slump in volumes discussed. A combination of currency volatility and uncertainties about the direction of oil prices were keeping buyers firmly sidelined.

West AfricaThere was a distinct lull in spot demand from Nigeria despite this being the dry season, attributed by traders to uncertainties about the outcome of next month’s presidential elections.

Spanish export price discounts to fob Mediterranean fuel oil

stayed at around $30/t, fob basis Tarragona, while typical freight rates for 5,000t cargoes to Nigerian ports were still pegged around the $130/t level.

Ivory Coast export price premiums to the Mediterranean fuel oil quotes were pegged unchanged at $25-30/t, fob basis Abidjan, while freight from Abidjan to the Nigerian ports was pegged around $40/t.

Southern AfricaUganda will open bids in March 2015 for two road upgrading projects, according to the Africa Development Bank (AfDB).

The projects include upgrading from gravel to bitumen of the 78.5km Rukungiri-Kihiihi-Ishasha/Kanungu and 44.5km Bumbobi-Lwakhakha roads. Uganda applied for a loan with the AfDB towards financing the projects.

400

450

500

550

600

650

700

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

South Africa $/t



Asphalt, 10-16 Jan

local currency/t $/t


Waterborne, fob

Bandar Abbas 335 360 -3

Bandar Abbas (drums) 390 440 +8

Singapore: class 170 390 395 -100

Singapore: class 320 400 405 -100

Singapore: pen 60/70 S$ 487 500 -11 365 375 -10

Singapore: pen 60/70 (drums) S$ 667 673 -10 500 505 -10

Bahrain dinar 160 160 0 425 425 0

Rayong: class 170 390 395 -100

Rayong: class 320 390 395 -100

Rayong: pen 60/70 baht 11,649 11,977 -772 355 365 -23

South Korea won 351,607 362,426 -28,001 325 335 -20

Taiwan NT$ 11,460 11,778 -492 360 370 -16

Waterborne, cfr

North China coast yuan 2,200 2,262 -131 355 365 -20

Central China coast yuan 2,231 2,726 -101 360 440 -15

South China coast yuan 2,262 2,664 -101 365 430 -15

North Vietnam (drums) 655 695 -10

South Vietnam (drums) 655 685 -10

Asphalt freight

Singapore-east Australia 137 140 0

Singapore-west Australia 85 90 0

Singapore-Gresik, Indonesia 37 40 +2

Singapore-south China 50 56 +2

Singapore-east China 60 71 +2

Thailand-south China 50 56 +2

Thailand-east China 60 71 +2

Thailand-east Australia 147 151 0

Thailand-west Australia 91 96 0

Taiwan-Ho Chi Minh, Vietnam 42 45 0

Taiwan-Haiphong, Vietnam 35 37 +2

South Korea-east China 28 35 +1

South China-Haiphong, Vietnam 35 37 +1

Economics Mid ±

Bitumen’s value as a fuel oil blendstock, Singapore 235 -2

Crude and refined products, 10-16 Jan

Low High ±

Crude $/bl

Dubai fob Dubai 41.95 45.45 -5.44

Basrah Light fob Basrah 40.75 43.46 -4.71

Banoco Arab Medium 41.60 44.31 -4.68

Refined products

Fuel oil HS 180cst fob Singapore $/t 263.00 280.75 -9.00

Fuel oil HS 380cst fob Singapore $/t 258.75 275.50 -7.63

Gasoil 0.5% fob Singapore $/bl 59.15 62.40 -5.18

ASIA-pACIFIC

singaporeSingapore bitumen prices declined by $10/t this week as weaker crude prices impacted buying interest.

Discussions for February-loading cargoes were under way, but few deals emerged this week.

Singapore cargoes were assessed $10/t lower and were at $365-375/t fob this week.

Deals done were infrequent this week, with the spread between buyers and sellers widening. One Singapore refiner is offering a February cargo at $370-380/t, yet the highest bids obtained are only at around the $330-340/t level. No deal has been reached, with buyers and sellers remaining wide apart. Another Singapore refiner has offered a cargo to a South China trader at $380/t, with bids at the $365-370/t level, but a deal has not been concluded. Singapore refiners have some volume of February cargoes unsold. While many buyers are waiting for the price to fall further, reckoning to buy at current prices remains risky.

The market sentiment has weakened alongside falling crude and fuel oil prices. With HSFO 180cst at the $280/t level, market participants are still expecting bitumen price to go down further, thinking that current $370/t level is not sustainable. Market participants are very cautious to buy, avoiding the risks of further price falls. Demand from Indonesia has become much weaker with the new annual budget introduced this month. And demand from China

Attention: 1. In response to subscriber comment Argus proposes to rename the following assessments : Fob Rayong to Fob Thailand 2. Argus also proposes to rename the following assessment : a. Fob Bandar Abbas to Fob Iran b. Fob Bandar Abbas drums, to Fob Iran, drums 3. In order to better reflect existing methodology, Argus proposes the following change to timing of its waterborne assessmentCargo Location Loading/Discharge window Existing ProposedFob Singapore 21-30 days 30-40 daysArgus seeks comments to these proposals before 16 January, 2015. To comment please contact Aabha Gandhi on [email protected] or at +65 64969966. Formal responses should be marked as such and should be submitted to [email protected] or by post to Aabha Gandhi, Argus Media 50 Raffles Place, 10-01, Singapore Land Tower, Singapore 048623 and received by 16 January, 2015. Please note formal responses will be published after the consultation period unless confidentiality is specifically requested.



Asphalt, 10-16 Janlocal currency/t $/t


Rack

Indonesia rupiah 6,707,456 6,707,456 -530,260 532 532 -46

Japan ¥ 55,000 62,000 0 468 528 +10

Mumbai rupees 36,925 38,924 0 594 627 +12

Mumbai (drums) rupees 40,024 42,024 0 644 677 +13

Singapore: pen 60/70 S$ 627 633 -130 470 475 -100

Singapore: pen 80/100 S$ (used in Malaysia) 573 580 -84 430 435 -65

South Korea won 772,454 801,664 -13,226 714 741 0

Thailand baht 16,735 16,735 -373 510 510 -10

CNOOC rack yuan Contract Posted ± Contract Posted ±

Binzhou, Shandong: AH-70, AH-90 2,950 3,050 476 492

Taizhou, Jiangsu: AH-70, AH-90 2,950 3,050 476 492

Luzhou, Sichuan: AH-70, AH-90 3,850 3,900 621 621

Panjin Northern Asphalt rack yuan

Panjin, Liaoning: AH-90, AH-100, AH-100, AH-140 2,800 3,000 452 484

PetroChina rack yuan

Liaohe, Liaoning: AH-70, AH-90, AH-100, AH-110, AH-140 2,750 3,000 444 484

Karamay, Xinjiang: AH-100, AH-140, AH-180 3,400 3,450 549 557

Karamay, Xinjiang: AH-70, AH-90, AH-110, AH-130 3,400 3,450 549 557

Qinhuangdao, Hebei: AH-70 AH-90 2,850 3,000 460 484

Jiangyin, Jiangsu (Xingneng): AH-70 AH-90 2,950 3,050 476 492

Jiangyin, Jiangsu (Alpha): AH-70 AH-90 2,950 3,050 476 492

Wenzhou, Zhejiang: AH-70, AH-90 2,900 3,000 468 484

Gaofu, Guangdong: AH-70, AH-90 3,100 3,150 500 508

Sinopec rack yuan

Tahe, Xinjiang: 90-A 3,300 3,400 533 549

Tahe, Xinjiang: 90-B 3,300 3,400 533 549

Xi’an, Shannxi AH-90 3,200 3,250 516 525

Qilu, Shandong: 70-A 2,950 3,050 476 492

Qilu, Shandong: 90-A, 70-B 2,900 3,000 468 484

Qilu, Shandong: 90-B 2,850 2,900 460 468

Luoyang, Henan: AH-90 3,200 3,250 516 525

Jinling, Jiangsu: 70-A, 90-A 2,950 3,050 476 492

Shanghai: AH-70 2,950 3,050 476 492

Zhenhai, Zhejiang: 70-A, 90-A 3,000 3,050 484 492

Zhenhai, Zhejiang: 70-B, 90-B 2,900 2,950 468 476

Guangzhou, Guangdong: 70-A, 90-A 3,100 3,150 500 508

Maoming, Guangdong: 70-A, 90-A 3,100 3,150 500 508

ASIA-pACIFIC

continued to be slow with its domestic prices continuing to drop since the start of the year. Traders who have cargoes available are trying to sell to the Vietnam market, which still has some demand. But demand from Vietnam should also be slightly lower in February for the Lunar New Year.

Freight has gone up slightly with tightness in vessel availability persisting as windy weather resulted in longer voyage times.

Ex-refinery to Malaysia has also gone down to the $430-435/t level this week.

MalaysiaThe domestic price has fallen by more than 200 Ringgit/t or nearly $70/t to $430/t. Demand continues to be weak, amid ample supply.

A Chinese trader previously has sold a January cargo from



Singapore and Rayong waterborne $/t Singapore pen 60/70: drummed and bulk $/t

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25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Singapore pen 60/70 waterborne Rayong cargo

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Singapore pen 60/70 drums waterborneSingapore pen 60/70 waterborne

ASIA-pACIFIC

Sinopec’s eastern Zhenhai refinery of 6,000t, which will unload at four ports, at slightly higher than $500/t cfr basis, traders said.

thailandPrices in Thailand went down slightly by $10/t to $510/t, with domestic demand continuing to be strong.

The robust demand has extended since December as the new government budget has come out. Included in the new budget are several new construction projects. The firm demand will extend at least until April, except that February’s demand may dip for Chinese Lunar New Year holidays.

The Thailand export price was assessed at $355-365/t fob level, which is down by $25/t from last week.

One main Thailand refiner, a regular exporter, will have no February supplies for export, as it will keep supplies for the domestic market which is higher-priced than for export.

indonesiaPrices in Indonesia fell to $532/t during the week, and domestic demand remained low.

With the country’s new annual budget working from this month, demand from Indonesia for February cargoes have become weaker, as importers are in no hurry to buy. Some importers still have cargoes at hand bought at the end of last year.

One importer has received an offer of a February cargo from a Singapore refiner at $370/t, with no deal yet reached.

south KoreaSouth Korean export prices fell by $20/t to $325-335/t fob basis.

One of South Korea’s refiners has awarded a tender to sell five February cargoes to a Chinese importer, at a price of $300-310/t on a fob basis. Other South Korean refiners have yet to decide February prices yet.

According to new data, bitumen exports by South Korean producers increased by 2.4pc from the previous month at

AnnounCement

Argus launches the Asian asphalt bulletin boardArgus launched the Argus Asian asphalt bulletin board, a weekly market information platform, on Wednesday, 15 October 2014. Participants are encouraged to provide Argus with bid, offer and transaction information for use in the calculation of the Argus Asian Bitumen Index, comprising fob Singapore (ABX1) and fob South Korea (ABX2) asphalt assessments. The bulletin board will run on Wednesday from 2-4pm (Singapore local time). To register, please go to http://www.argusmedia.com/Info/General/Argus-Asian-Bulletin-BoardFor further information on the Argus Bitumen Index, including methodology, specifications and user registration, please go to http://www.argusmedia.com/Oil-Products/Argus-Asphalt#AsphaltBB or contact [email protected] can also contact: Sunita Sharma, Vice-President, Asia Products, Argus on tel: (+65) 64969991 or at [email protected] Aabha Gandhi, Argus Asia Asphalt editor, Argus, on tel: (+65) 64969933 or at [email protected].



300

350

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25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Bandar Abbas waterborne (drums)Bandar Abbas waterborne

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25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

North China South China

Bandar Abbas: drums and bulk $/t Delivered cargoes: North and South China $/t

ASIA-pACIFIC

313,777t, however, year-on-year exports were up by 10.9pc. Bitumen production was up by 10.9pc from the previous month at 485,900t in November, but year on year production saw a minimal change at 0.8pc.

Vietnam Domestic prices went down by $10/t to $590-600/t amid steady domestic demand this week.

Contractors have been rushing to conclude project works in the country ahead of the Lunar New Year holidays in February. Buyers were mostly receiving their cargoes, but were also resolving shipping delays in the country.

Buying interest for February cargoes from Vietnam importers are slowing down, thanks to next month’s holidays. The holiday slowdown will last about half of the month from mid-February, so demand should go down as construction projects slow.

One of the main importers will not buy any February cargoes because its January cargoes have been delayed and it will then have enough for February.

taiwanTaiwan’s bulk prices were down by $16/t to $360-370/t fob this week.

The privately-owned supplier may have 1-2 February cargoes for export, after it sold a total of six February cargoes, with four to Vietnam, one to Malaysia and one to the Philippines. The additional 1-2 cargoes are still at the price negotiation stage and no deal has yet been reached.

China Tracking the decline in Singapore and South Korea prices, import cargoes to China were down by $20/t to $355-365/t cfr north China, down by $15 /t to $360-440/t cfr for east China and down by $15/t to $365-430/t for south China.

Domestic price have continued to drop amid weak demand. Prices from domestic refineries in northeast China have come down to 2750-2800 Yuan/t, and down to 2950-3000 Yuan/t level in east China, and 3100-3150 Yuan/t level in south China.

The continuous price drop has dampened market sentiment. Buyers are cautious to buy cargoes, thinking it risky to hold the cargo in a falling market. Only those who have real demand or projects coming up will start to buy small volumes. Many market participants think current prices have not reached the bottom yet, and are patiently waiting for the price to go down further. Little winter stockpiling demand emerged, also due to weaker demand and worries about further price falls.

The state-controlled refiner has sold a January cargo of 6,000t from its Zhenhai refinery to a Chinese trader, who has sold it into Malaysia market in earlier weeks. The refiner will have at least a total of 8-10,000t of February cargoes to export, from its Maoming or Zhenhai refineries. The February cargoes are still in the stage of negotiation.

A north China importer has obtained five February cargoes from one of South Korea’s refiners, at around $300-310/t on a fob basis.

AustraliaPaving works resumed this week, but buying momentum remained largely cautious.



hh

200

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600

700

25 Apr 14 18 Jul 14 10 Oct 14 16 Jan 15

Singapore pen 60/70 waterborneSingapore HSFO 180cst

Singapore pen 60/70 and HSFO cargoes $/t

ASIA-pACIFIC

Buyers were not willing to commit for any spot cargoes and were mostly picking up their previously committed cargoes.

Demand for bitumen has slowed down in Queensland where elections are expected to be held by end of the month, after which clarity in project works is expected to be there.

An importer has bought a large February cargo from US. The arbitrage cargo is estimated to be around 33kt. The cargo will reduce some demand from Singapore or Thailand.

indiaIndia’s domestic price will remain unchanged for this week, and the next price modulation is estimated to be on 1 February.

Domestic demand continued to be good in south India, while demand is low in north India because of cold weather. Imports from Iran continues to come into south India, with deals done said to be done around $350/t fob for bulk and $390/t fob for drum cargoes.

bahrainBahrain prices were steady this week at $425/t fob.

A producer moved around 10,000t via vessels this week and around 2,000t via tank trucks.

iranIran’s bitumen prices experienced a slight rebound this week as the rial strengthened against the US dollar.

Traders quoted cargoes higher by $6-10/t fob Bandar Abbas from the previous week.

The free market exchange rate was in a 34, 360 to 34,040 rial to the dollar band.

Oversupplies from the producers of bulk cargoes impacted the prices, and traders offered cargoes lower by $5-10/t this week.

There were mixed views to the upcoming revision of vacuum bottom feedstock prices expected next week by state-owned NIOC. Some market participants expected a strong revision, while others pointed out that there may not be a significant change as NIOC may be adopting a new price formula.

Iranian cargoes remained uncompetitive from Tabriz producers for export to Georgia and Turkey.

Traders’ offered bulk cargoes in the $335-360/t fob Bandar Abbas for different terms of payments.

While drum cargoes for cash in advance payments were in the range of $390-400/t fob Bandar Abbas. However, on other payments such as cash against document (C&D) or Letter of credit (L/C) were at $425-440/t fob Bandar Abbas for prompt cargoes.

Jey Oil prices were firm this week. The producer sold 1,000t of pen 60/70 in drum at $483/t fob Bandar Abbas (equal to $381/t fob Bandar Abbas on free market exchange rate). Terminal Handling Charges were included on FOB Bandar Abbas this week.

Pasargad Oil didn’t supply any cargo this week. IME costs including of brokerage fee and IME commission is $1.35/t.

Iran local marketState owned-NIOC kept VB feedstock prices stable this week.

Weaker buying sentiment impacted the feedstock prices from Tabriz, Isfahan and Tehran refineries. The feedstock prices settled lower than last week’s offer price.

NIOC settled 26,000t VB at 8,499 rials/kg ex-Tehran. The producer settled 12,000t VB from Bandar Abbas refinery at 8,788 rials/kg.

Also 10,500t VB was sold at 8,404 rials/kg ex-Tabriz and 500mt VB was sold at 9,666 rials/kg ex-Shiraz.

3,800t VB was sold from NIOC’s Isfahan refinery at 8,369 rials/kg.

Domestic bitumen prices were stable and healthy sales were reported. Jey Oil price was steady and it sold 8,849t of pen 60/70 and 85/100 at 10,083 rials/kg ex-Isfahan.



ASIA-pACIFIC

Pasargad Oil also kept the prices stable. It sold 19,205t of pen 60/70 and 85/100 at 10,731 rials/kg ex-Tehran and sold 8,198t of pen 60/70 at 11,177 rials/kg ex-Shiraz and 5,572t of pen 60/70 at 10,661 rials/kg ex-Bandar Abbas. From its Arak refinery Pasargad Oil sold 11,565t at 10,083 rials/kg while from its Abadan refinery it sold 7,739t of pen 60/70 at 11,202 rials/kg . Also 17,398t of pen 85/100 was sold at 11,092 rials/kg ex-Tabriz.

Producers sold 79,575t bitumen in the domestic market.

Iranian export sales through the IME, 10-15 Jan Grade seller price $/t packing Volume t destination

60/70 Pasargad Oil No supply Bulk 0 Export by ship from Bandar Abbas

Drum 0 Export by ship from Bandar Abbas

Bituplast 0 Export by ship from Bandar Abbas

Bulk 0 Export By ship from Imam Khomeini port

Bulk 0 Supply ex-Tehran

Drum 0 Supply ex-Tehran

Bituplast 0 Supply ex-Tehran

Bulk 0 Supply ex-Arak

Drum 0 Supply ex-Arak

Bulk 0 Supply ex-Tabriz

Drum 0 Supply ex-Tabriz

Bituplast 0 Supply ex-Tabriz

Hormozgan Oil Industry 467 Bulk 1,000 Export by ship from Bandar Abbas

Hormozan Oil 450 Bulk 3,450 Export by ship from Bandar Abbas

Sam Energy Trading 420 Bulk 2,500 Export by ship from Bandar Abbas

Fara Shimi Rooz 450 Bulk 0 Export by ship from Bandar Abbas

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

483 Drum 1,000 Export by ship from Bandar Abbas

385 Bulk 0 Export by ship or truck, supply ex-Esfahan

450 Drum 0 Export by ship or truck, supply ex-Esfahan

Bam Gum Ayegh Oromieh 440 bulk 500 Export by ship or truck, supply ex-Oromieh

Tavan Gostaran Ayegh 482 Drum 500 Export by ship from Bandar Abbas

Black Gold Trading 464 Drum 1,000 Export by ship or truck, supply ex-Esfahan

Akam Bitumen 375 Bulk 4,665 Export by ship or truck, supply ex-Qom

Janat Abad Bitumen 375 Bulk 2,000 Export by ship or truck, supply ex-Garmsar

GheisarJonob Kang 400 Bulk 900 Export by ship or truck, supply ex-Bandar Moalem

85/100 Pasargad Oil Same as 60/70 Bulk 0 Export by ship or truck ex- all factories

Drum 0 Export by ship or truck ex- all factories

Jey Oil 385 Bulk 0 Export by ship and truck, supply ex-Esfahan

450 Drum 0 Export by ship and truck, supply ex-Esfahan

No supply Bulk 0 Export by ship from Bandar Abbas

483 Drum 0 Export by ship from Bandar Abbas

Negin Gum Pars 460 Bulk 0 Export by ship and truck, supply ex-Tabriz

Esfahan Ghir 420 Drum 200 Export by ship from Bandar Abbas

Hormozgan Oil industry 467 bulk 1,000 Export by ship from Bandar Abbas

Akam Bitumen 375 Bulk 1,900 Export by ship or truck, supply ex-Qom

Mc 250 Jey Oil 555 Bulk 0 Export by ship or truck, supply ex-Esfahan

Exchange rate 1$ = 27,348 rials

Iranian domestic sales through the IME, 10-15 JanGrade Volume t price rials/kg

60/70 57,428 10,083-11,202

85/100 21,398 10,083-11,092

MC250 749 14,764-15,800

Emulsion Rapid 0 _

Emulsion Slow - -

Exchange rate 1$ = 27,348 rials



Strike at Colas Dunkirk refinery hits outputA strike in protest against the loss of jobs at Colas’ speciality products refinery in Dunkirk, France, is disrupting production and loadings of base oils.

Colas said that it is unclear when the strike, which started yesterday, will end and production and loadings resume.

The company and French trade union federation CGT will meet tomorrow to negotiate the loss of jobs resulting from the planned discontinuation of base oils and paraffin production.

After several rounds of strikes and negotiations, Colas proposed to maintain 109 of the 275 jobs but the CGT is pushing for another 11 positions to be kept.

Colas announced plans to discontinue its base oils and paraffin production after forecasting an operating loss between €45mn-50mn ($52mn-58mn)for 2014. The company will continue production until at least March to fulfil its term contracts.

Colas acquired the Dunkirk site from ExxonMobil and Total in July 2010.As part of the acquisition, the refinery benefited from a processing contract with Total that covered 40pc of its production until the end of 2012. In 2013, Colas produced 294,000t of bitumen, 258,000t of base oils, 304,000t of fuel oils and 48,000t of paraffin.

Arbitrage to US Gulf pushes LatAm crude eastA difficult arbitrage to the US Gulf is pushing heavy Latin American crude east toward Asia.

The 450,000 b/d Seaway twin crude pipeline began initial deliveries from Oklahoma to the US Gulf coast in late December, according to owners Enterprise Products Partners and Enbridge Energy Partners, and is carrying 100pc heavy crude to Jones Creek, Texas.

In addition, refinery maintenance is pushing competing crude Mars to more than $3/bl below WTI, the lowest level relative to the US benchmark since April. Coupled with freight rates from the Caribbean to the US Gulf rising by about 60¢/bl since December to about $2.11/bl, Mars was assessed yesterday at a discount of about 90¢/bl relative to Colombia’s similar crude, Vasconia, delivered to the US Gulf.

The larger supply of discounted heavy crudes on the US Gulf coast this month has forced many Latin American cargoes across the Atlantic, with eight vessels scheduled to make the trip before the end of January.

According to recent fixture reports, Mercuria intends to charter Suezmax Eleni from Argentina to China starting 28 January and a Dynacom-owned Suezmax on an eastbound trip out of Coveñas, Colombia, two days later.

China imported 7.18mn b/d of crude in December, up by

16pc from the previous month and by 14pc from December, as falling prices continued to boost the country’s import demand.

State-controlled oil company Petrobras has scheduled Suezmax Mare Doricum to carry Brazilian crude to Singapore starting 24 January, and Tipco Asphalt scheduled a ship to leave the Curacao Terminal for its Malaysia refinery starting 25 January.

Repsol will charter Aframax Super Lady from the Caribbean to the United Kingdom and the Mediterranean starting 14 January, and three ships will leave Mexico for overseas destinations for various companies by end January.

United Refining profits amid low pricesDelays between crude purchases and product sales in a plunging market will erode margins early this year at United Refining’s 70,000 b/d refinery in Warren, Pennsylvania.

The refiner expected the differential between purchased crude prices and refined product sales to fall by a third in the three months ending 28 February, according to a report to shareholders. Narrowing margins reflect the difference between crude purchases and what products will fetch after the crude is delivered and processed amid falling prices.

Sales volumes in the three months ending 30 November through Kwik Fill, Citgo, Keystone and Red Apple retail stations served by the refiner fell by more than 5,000 b/d, but 50pc higher per-gallon margins delivered a stronger income for the retail segment compared to the same period of 2013.

Consumers will not change driving habits for lower prices, chief executive John Catsimatidis said.

“Are you saying that just because prices are half-price, let’s go for a ride in the Allegheny Mountains?” Catsimatidis said. “I don’t think people care anymore, or there’s a small percentage of people who care.”

neWs

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The Warren refinery’s crude throughputs over the same period fell fell by 4.8pc, to 64,100 b/d, compared to 2013. The percentage of crude heavier than 26°API processed during the quarter remained unchanged from 2013, at 62pc. The refinery has no planned maintenance for the next three years.

United reported a profit of $17.6mn, up from a $1.1mn loss for the same quarter of 2013.

India Reliance refining margins waneAverage gross refining margins at India’s private-sector Reliance Industries (RIL) fell by 12pc in October-December to $7.3/bl from $8.3/bl in the previous quarter as a plunge in oil prices left stocks at a lower holding value.

RIL’s profit fell by 4.5pc from a year earlier to Rs52.6bn rupees ($834mn) in October-December, the third quarter of its 2014-15 fiscal year, on a turnover of $15.3bn, which declined by 20.4pc from a year earlier because of a 30pc decline in oil prices. The Brent crude price has dropped more than 50pc to around $47/bl since last June.

RIL’s 1.24mn b/d refining complex at Jamnagar processed 17.7mn t (1.41mn b/d) of crude in the latest quarter, 114pc of its declared capacity. This was up from 1.35mn b/d (17mn t) a year earlier and up from 1.38mn b/d (17.3mn t) in the previous quarter. Exports of refined products from Jamnagar were 11.9mn/t in the third quarter, rising from 11.6mn t a year earlier and from 10.7mn t in the previous quarter.

Indian refiners typically declare run rates of more than 100pc because they under report installed capacity, making global comparisons difficult.

The Singapore refining margin strengthened to $6.3/bl in October-December from $5.4/bl a year earlier and from $4.8/bl in July-September, Reliance said. Asia-Pacific gasoil cracks averaged $16/bl in October-December from $14.4/bl in July-September and $17.7/bl a year earlier. Cracks improved quarterly because of improved demand from China and India and unplanned outages. Indian demand rose by 11pc quarter-on-quarter.

Fuel oil cracks in Asia-Pacific strengthened to -$7.2/bl from -$10.5/bl in the previous quarter because of bunker sales and fears of supply disruptions from the bankruptcy of major European supplier OW Bunker.

The Arab Light-Arab Heavy differential at $4/bl in the period narrowed by 60c/bl year on year and 80c/bl quarter on quarter.

RIL’s upstream operations continued to struggle. The KG-D6 block produced 38.5bn ft³ (11.8mn m³/d) of gas in the October-December period from 40.6bn ft³ (12.47mn m³/d) of gas in July-September because of the shutdown of wells in the D1-D3

field. The area produced 5,435 b/d of crude in the period as well as small amounts of condensate.

Gross production at its shale gas operations in the US averaged 1.25bn ft³/d in the October-December quarter, growing by 5pc from the previous quarter and by 21pc from one year earlier.

IEA says oil price ‘tide will turn’The IEA said today that while an oil price recovery may not be “imminent” the “signs are mounting that the tide will turn”. “Opec’s embrace of market forces last November is a game changer”, it added.

In its first Oil Market Report (OMR) of 2015, the OECD’s energy watchdog does not change its lackluster outlook for demand growth but is far more bullish than Opec was yesterday in its monthly report on the impact of the price fall on non-Opec production.

The report says that the sell-off has reduced its expectations of 2015 non-Opec supply growth by 350,000 b/d to 950,000 b/d. Yesterday, Opec cut its forecast by just 80,000 b/d to 1.28mn b/d. The IEA sees Colombia’s growth trimmed by 175,000 b/d, and Russia’s by 30,000 b/d. Canada’s growth will be cut by 95,000 b/d and US light tight oil by 80,000 b/d.

The IEA all but holds its 2015 demand growth forecast at 900,000 b/d, against just 600,000 b/d for 2014, putting 2015 demand at 93.3mn b/d.

But the change in the non-Opec production outlook means that the IEA lifts its forecast for calls on Opec crude.

neWs

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Argus Asphalt Report

illuminating the marketsPetroleum

Issue 15-2 | Friday 16 January 2015

Registered officeArgus House, 175 St John St, London, EC1V 4LW Tel: +44 20 7780 4200 Fax: +44 870 868 4338 email: [email protected]

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new york, usTel: +1 646 376 6130

Washington dC, usTel: +1 202 775 0240London, uK Tel: +44 20 7780 4200Astana, Kazakhstan Tel: +7 7172 54 04 60beijing, China Tel:+ 86 10 6515 6512 dubai Tel: +971 4434 5112 Moscow, Russia Tel: +7 495 933 7571

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By the end of this year, the call is assessed at 29.8mn b/d. With Opec having held its agreed production target at 30mn b/d when it met in late November, the IEA numbers will be taken as evidence that the plan pushed by Saudi Arabia and its allies to allow prices to fall in order to squeeze non-Opec production is working. But with stocks still building rapidly, it will be the second half of the year before rebalancing occurs.

For the whole of 2015, the IEA now puts call on Opec crude at 29.2mn b/d, reversing a cut it made in its December OMR, and higher than Opec’s own trimmed forecast yesterday of 28.8mn b/d.

In the commentary to its report, the IEA said: “How low the market’s floor will be is anybody’s guess.” The fall in production growth for US light tight oil is currently limited by hedging programs, it added.

The demand response to low prices is proving elusive, the OMR said. Weak underlying economics are a major limiting factor to which are added weak consumer country currencies, subsidy cuts, tax hikes and deflationary concerns in some countries.

neWs

Weekly Ethylene Report

Argus DeWitt Ethylene provides global coverage of contract and spot market prices for ethylene, polyethylene and major derivatives. The report also includes a selection of global feedstock prices, detailed coverage of ethylene production economics, operational issues affecting the market, and analysis of feedstock and relevant polymers markets.

Email us at [email protected] to request further information or a sample copy

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Argus Americas Asphalt Summit

March 24-26, 2015Miami, Florida

Petroleum

Save the date. The Argus Americas Asphalt Summit is moving to Miami!

The US asphalt market is going through a period of uncertainty. Resurgent US crude production has reduced asphalt supplies as re�ners move to running lighter crudes. And new coking units have raised demand for vacuum residues, cutting asphalt production even further. Coastal asphalt distributors have been resorting to imports from overseas to make up the shortfall.

Join your peers from across the asphalt industry to gain valuable insight and do business at this exciting annual event. Now in its 8th year, this conference brings together asphalt re�ners, upgraders, contractors, industrial end-users, logistics providers, DOTs and others to discuss the major issues shaping these markets.

Topics to be addressed include:

Impact of changing crude slates on asphalt productionAsphalt market supply and demand dynamicsUS highway funding/Public-Private Partnerships (P3s)Economic and construction outlookImpact of new technologies on asphalt supplyHow RAP and RAS are impacting the quality of hot mixRoo�ng demand for asphaltDemand from Latin American importers

…and more

Register early and save $700 on the full delegate fee!

Pre-register early and save!www.argusmedia.com/Americas-Asphalt

Argus Americas Asphalt Summit

DATES & VENUEMarch 24-26, 2015Miami, Florida

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REGISTRATION*

Pre-registration (register by January 16, 2015): $1,195 Early registration (register January 17 through February 20, 2015): $1,395 Standard registration (until February 21 through March 23): $1,695Onsite registration (March 24-26, 2015): $2,895

Fees include participation in all sessions, conference luncheon/reception, co�ee breaks, continental breakfast and one set of conference documentation per person. Travel and accommodation costs are not included.

For group rates, contact [email protected]

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REGISTRATION FORMPlease PRINT in block letters and return to:Argus Media, Inc2929 Allen Parkway, Suite 700Houston, TX 77019Attn: Argus Americas Asphalt SummitTels: +1 713 429 6310 | +1 713 429 6346 Fax: +1 855 446 8538Email: [email protected]/americas-asphalt

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Antitrust compliance reminderArgus takes compliance with antitrust law seriously. The purpose of the Argus Americas Asphalt Summit is to help market participants understand the impact of crude slate changes on asphalt production, supply and demand dynamics and discuss the major issues shaping the asphalt markets.Argus reminds all participants of the need to be mindful of the requirement to comply with antitrust and competition laws. There should be no discussion of any matters relat-ing to competition among participants, including discussion of individual prices, rates or market strategies and no exchange of information concerning any other competitive aspect of an individual company’s operation. Should any participant to this conference attempt to initiate a discussion with other participants on any of these matters, we rec-ommend that other participants end the conversation immediately, and at all times act in accordance with their own antitrust compliance policies and all applicable laws.

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Documents

Argus Asphalt Report