Bitumen Report Argus Asphalt

8/10/2019 Bitumen Report Argus Asphalt

1/23

Copyright 2014 Argus Media Inc

ArgusAsphalt 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-Pacic 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 shortfallpushed 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-summerprovincial 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-

renery in Rotterdam and Antwerp.

Germanys 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 Aug

Low 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-Pacic 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


2/23

Page 2 of 21Copyright 2014 Argus Media Inc

ArgusAsphalt 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-renery in the south, east and west of the country and to

425-430/t in the north and southwest.

Hungarys MOL dropped its export prices by 5-15/t for

August volumes. Regional players reported Hungarian exportsinto central/southeast European markets at 410-420/t ex-

renery. MOL was set to raise its export prices to Romania by

15-20/t in the rst week of August to 460-465/t ex-renery.

Egyptian rener EGPC issued a fresh tender to import ve

bulk cargoes of Pen 60/70 bitumen during September for

delivery into Alexandria. The rst 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 wereunchanged from July. That meant price assessments stayed

at 480-490/t ex-renery 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 renery 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.

Indonesias truck racks were closed for Hari Raya Puasaholidays, 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

renery 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 trafc

had yet to impact Korean prices.

Upcoming Argusasphalt/bitumen conferences:

Argus Asia-Pacic and Middle East Bitumen 2014

Singapore, 24-26 September

Argus Africa Bitumen 2015Accra, Ghana 4-5 February


3/23



hhh

0

20

40

60

80

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

EAST COAST

East coast asphalt prices $/st

Low High

Rack prices, fob, 28 Jul-1 Aug

Maine 610 625* 0

MA/NH 620 650* 0

Connecticut 570 600 0

Eastern and central NY 540 580 0

Western NY/Western PA 515 585 -3

Northern NJ/NY C Metro 545 570 0

Delaware/SE PA/south NJ 540 560 0

Maryland/northern Virginia 535 565 0

Central and lower Virginia 555 570 0

Coastal Carolinas 570 590 +15

Inland Carolinas 550 600 0

Inland Georgia 585 605 +8

Coastal Georgia/northeast Florida 565 590 +15

West coast of Florida 545 580 +15

Southern Florida 550 595 +20

Waterborne prices, 28 Jul-1 AugNew Jersey barge fob 530 550 0

N New Jersey/New York City Metro cif cargoes 545 565 0

New England cif cargoes 560 575* 0

Asphaltic crude breakeven economics are for a topping renery and represent

incremental barrels. * Represents PG 64-28; na = not applicable

Product prices

31 Jul

Heating oil /USG 278.71 +1.62

3% HFSO $/bl 90.35 -0.20

Economics $/st

31 Jul

Asphaltic crude breakeven

Maya 473.31 -31.39

Arab Heavy 632.06 -5.40

Asphalts HSFO alternative

East coast 463.23 -2.53

Asphalts HSFO alternative arbitrage, economics to US east coast

From US Gulf coast 73.29 +1.06

From 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 rener 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 rst 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

reners 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 at, 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 at 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


4/23



hh

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


Alabama (southern) 555 565 0Alabama (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 renery 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

Asphalts HSFO alternative

Gulf coast $/st 451.71 -1.06

General rening 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 rell his rack.

Houston was quoted at 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

hh

-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


5/23



hh

350

400

450

500

550

600

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

Chicago Rack Midwest barge

hh

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 roong ux 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 inux

of soft material suitable for roong ux, mainly from Baton

Rouge and Oklahoma City. Another distributor of roong

asphalt said availabilities in Oklahoma were plentiful, with

prices around $540-560/st.

In Michigan, the Department of Transportation held a lettingon 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 renery 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 nish paving jobs while the weather is

good. Indianapolis and Detroit-area racks also rmed, 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 at, 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 rst week of August last year.

East Gulf coast barge vs Midwest barge fob $/st

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

hh

500

550

600

650

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

North/South Dakota

Northern Minnesota/northern Wisconsin

Southern Minnesota/southern Wisconsin

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


6/23



hh

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 0Wyoming 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

Asphalts 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

Roong ux 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

rener 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 Pacic 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 Californias 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 at this week,

selling at $525-535/st for PG 64-10 and 64-16.

Rocky Mountain wholesale rail-Midwest barge $/st

hh

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


7/23



Canada methodologyEastern Canada posted prices for asphalt: These are posted prices announced by suppliers and reners 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 arereported 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. Roong BUR liquid prices: This is built-uproong 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 asphaltplants 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 winningquotes 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 pricesDifferential to

PG 58-28Effective 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 prices

C$/t $/st

Low High Low High


Quebec 765 770 +33 633 637 +18

Ontario 715 745 +3 592 617 -7

Roong 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 gradeCurrent posted spot

priceEffective

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 asphaltgrade

C$/t $/st

Low High Low High

British Columbia150/200A or PG64-25(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 months 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 rming 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 roong ux markets,

which were said to be trading C$75-100/t higher than paving

grades.

hh

600

650

700

750

800

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

Quebec Ontario

Quebec/Ontario C$/t


8/23



hhh

-100

0

100

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

Netherlands (Rotterdam) Spain

Italy Greece

Ivory 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, downfrom $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 eets fully employed

under normal contractual commitments. A Spanish oil rener

renewed its time charter on the 7,917 dwt Lagan until the end

of August. The tanker was taking a cargo from Cepsas Huelva

renery 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-renery, as losses in

the crude and fuel oil markets stopped sellers from pushing

through planned price hikes.

European bitumen prices

28 Jul-1 Aug /t 28 Jul-1 Aug $/t

Low High Low High

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 -3Spain 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 renery or terminal delivered priceprice 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

Bitumens 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 Bitumens 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


9/23



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 car o 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-BeneluxNegotiations 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-renery 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 ofJuly 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-renery 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 countrywere lowered to the 430-440/t ex-renery range, while

a domestic producer said it had dropped prices to 455/t

ex-renery 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 erce, with

discounts being offered on many accounts in a bid to keep

business.

Hungarian rener 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 renery in Schwedt, eastern

Germany was reported to have encountered problems.

Issues affecting bitumen output at Shells Godorf renerywere believed to have been resolved, adding to domestic

and regional supplies after recent renery restarts at

Gelsenkirchen, Leuna and Lingen after turnarounds.

Central Europe-BalkansHungarys 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-renery. MOL

was set to raise its export prices to Romania by 15-20/t in

the rst week of August to 460-465/t ex-renery.

Export prices for standard penetration grades from Bosnias

Bosanski Brod renery were reported to have risen by around

$10/t in late July to reach the $550-560/t ex-renery on 1

August. Discounts to fob Mediterranean high-sulphur fuel

oil were in the $10-20/t range on an ex-renery basis. Total


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


10/23



hh

710

720

730

740

750

760

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

hh

620

640

660

680

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

monthly bitumen sales from the renery were reported at

24,000-25,000t for July.

Bitumen imports into Romania from one of the Polish rener/

exporters were reported at 440/t on a delivered basis,

broadly equivalent to a Polish ex-renery 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-renery 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, withfresh EU funds not expected to have a signicant 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 are up of

violence in Libya meant a halt to bitumen cargo ows to that

market was expected for at least the month of August.

The 3,500 DWT Katerina L was xed 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 Soa was

en route to Lebanon, following a previous cargo shipment

into Beirut on board the Katerina L. The Soa was believed

to have been used to make a shipment into the northern

Greek port of Thessaloniki where a Greek trading rm runs a

bitumen terminal.

Egypt provided a fresh boost to the regional market as EGPC

issues a new tender to import ve cargoes of bitumen during

September.

EgyptEgyptian rener EGPC issued a fresh tender to import ve

bulk cargoes of Pen 60/70 bitumen during September for

delivery into Alexandria. While 5,000-6,000t cargo sizes wereagain specied 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 rst 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 rst of two cargoes won by European oil trading rm 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 renery in Agio Theodori, Corinth, in Greece. The

cargo will not be discharged until letters of credit have been


UK south $/t South Africa $/t


11/23



issued by EGPC for receipt of the volume. The rst of four

cargoes to be supplied by Switzerland-based trading rm 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 renery 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-renery 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 edgeddown 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 renery in Livorno, temporarily

restricting such loadings, a factor that coincided with the one-day strike on 29 July that halted renery production at Enis

Livorno and Taranto reneries. Eni was reportedly seeking to

maximise its domestic sales in northern Italy from the Livorno

renery, although that effort was hampered by weak regional

demand. In the south, the Taranto renery was mainly focused

on seeking export outlets, market participants said.

Talks were being held on 30 July between Eni management

and unions representing renery workers after a 24-

hour strike on the previous day halted production at the

companies reneries and other plants across Italy. The strike

action, in protest against Enis plans to close a number ofits reneries for economic reasons, was expected to be

repeated during the course of August. The Livorno and

Taranto reneries, 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-renery 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 countrys 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 nancial 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 conrminga 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 acrossthe 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 onboard the Biskra, owned and operated by a global bitumen

shipping and trading rm. 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 rms were requesting freight rate quotes for



12/23




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 renery 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 renery 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 ve years, relying on imports of the product to meet

domestic demand that stands anywhere between 500,000t/yr

and 1mn t/yr

The Kaduna Rening 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 renery 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 rms, 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 nancial year. This will be

followed by 3000km in 2015/2016 made up of 80pct small

roads, and 20pc highways. In the 2016/2017 nancial 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 rms 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 countrys suppliers with effect from 1 August to an

average price level of R7,000/t ($650/t).


13/23



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 theweather.

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 Aug

Local currency/t $/t

Low High Low High

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-renery 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 0Singapore 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 specied. Exchange rates used effective for Thursday of week reported

Asia-Pacic 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 $/t

31 Jul

Bitumens HSFO alternative Singapore 548.23 +1.25

Bitumen freight rates, 28 Jul-1 Aug $/t

Low 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


14/23



MalaysiaBlending issues continued to cut Malaysian bitumen

production, with renery 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 trafcafter the holidays.

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

slowed paving.

Thailands rener and petrochemical producer was expected

to announce September availabilities next week. The rener

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.

IndonesiaIndonesias 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 reneries, 28 Jul-1 Aug

Area Province Renery GradePosted

priceyuan/t

Contract

priceyuan/t

Posted

price $/tContractprice $/t

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

Low 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


15/23



hh

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

renery 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 trafc

had yet to impact Korean prices. Reduced renery throughput

could start to support Korean cargo prices going forward.

New data put Koreas June bitumen production down 18.7pc

month-on-month at 431,138t, but production was up 4.2pcyear-on-year. Bitumen exports dropped to 291,734t in June

from at 330,794t in May, but were up 21.8pc year-on-year.

VietnamVietnamese 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 thecountry 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, butsome buyers said they may could pick up one or two cargoes.

TaiwanTaiwanese material was stable at $513-518/t fob, with four or

ve cargoes likely to be up for sale in September.

Taiwans 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.

ChinaChinese import and rack prices held steady, in line with

unchanged Korean and Singapore markets.

Run cuts at Korean reneries 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


16/23




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

On the export side, Chinas state-controlled rener sold a

rare 3,000t cargo of into Thailand via a trader. The cargo

loaded in mid-July.

IndiaIndian reners raised their prices this week despite a slump

in demand for bitumen.

Reners upped their prices by 250 rupees ($4.10/t) effective

1 August despite a slump in rack demand. They were offering1,000-2,000 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 reners 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.

Iran

Iranian markets were quiet, but export prices were expectedto 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

Bitumengrade

Producers Settled price $/t PackingVolume

tDestination

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 & Rening 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 2014

Bitumen 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


17/23



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 market

National 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 renery and

6,060t from its Shiraz renery, 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.


hh

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


18/23



hh

70

80

90

100

110

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

WTI Lloyd Blend

hh

-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 renery expansionThe $900mn expansion of Surinamese state-run Staatsolies

7,000 b/d Tout Lui Faut renery 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 renery 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 renery 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 renery will meet the countrys 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 FrenchGuiana.

Italian engineering rm 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 elds.

Staatsolie recently awarded a contract to Trinidads 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 UKs Tullow Oil, US Kosmos, Chevron, USindependent Apache and Malaysias state-controlled Petronas.

Surinames 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 -7.83

WTI Midland 87.72 -3.02

WTS Midland 90.67 -3.29ANS USWC 105.97 -0.90

Mixed Sweet (MSW) 87.83 -3.00

Lloyd Blend (pipeline) 75.20 -1.14

Western Canadian Select (WCS) 75.45 -1.14

Maya del USGC 91.90 -2.02

Non-Americas prices $/bl

Basis 31 Jul on week

Tapis 107.76 -1.32

North Sea Dated 104.46 -1.32

Dubai 104.67 -1.25

Arab Heavy, fob Ras Tanura

Differential to Asia Oman/Dubai -2.80 0.00

Differential to Europe Ice Bwave -8.40 0.00Differential to US ASCI -0.15 0.00

Kuwait fob

Differential to Asia Oman/Dubai -0.40 0.00

Urals NWE 103.46 -0.87

Urals Med 104.56 -0.32

WTI - Lloyd Blend $/bl

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


19/23



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 nancial 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

countrys constructors federation Seopan.

Tenders offered by regional authorities were at on the

same month last year at around 171mn. But the countrys

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

rst ve 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. Sometenders 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-Zdrj in the south of Poland. In three years time, the

new section is intended to absorb trafc 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 trafc

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

yovers and ve bridges. Furthermore, the tram lines will

be modernised.

OIL INDUSTRY BRIEFS

Signs of spending revival in NigeriaInvestment uncertainty in Nigeria caused by the governments

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 countrys main foreign partners. But

some projects are progressing, despite the sharp slowdown.

Shell, Total, Chevron, Italys Eni and US company ConocoPhillips

have sold upstream assets as onshore and shallow-water elds

become uneconomic. Exploration and development in Africas

largest oil exporter has been declining since 2006.

But Shell is aiming to make a nal 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

Chevrons undeveloped Aparo eld.Shell plans to bring the 45,000 b/d Bonga Northwest eld 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 nal 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 rm is

carrying out development drilling at the 80,000 b/d Satellite

project. But uncertainty over future scal and other operating

terms have held up investment decisions on the key 140,000 b/d

Bosi and 110,000 b/d Uge eld developments.

Total aims to bring the 200,000 b/d offshore Egina eld in block

130 on stream at the end of 2017 after it took a nal investment

decision last year. The second phase of Totals 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 eld by 50,000 b/d from 2016, although it has recently triedto sell its 20pc stake in Usan.

Venezuela swims against the tideVenezuela is moving away from the downstream. Growing

trade links with Asia-Pacic buyers, particularly China, are

prompting the change as state-owned oil rm PdV struggles to

maintain crude production. But Caracas is swimming against


20/23



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 reneries, around 25 years

after acquiring them. The rm 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 rener Ruhr Oel 234,000 b/d of

net capacity to Russias 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 reneries or to use as bunker fuel,

and the rest is resold by Chinese rms. PdV has pledged to

increase oil sales to China to 1mn b/d in 2016.

The rm has been diverting crude from the US to supplyAsia-Pacic markets for a number of years. It has cut runs of

Venezuelan crude at its US reneries 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 PdVs strategy, Saudi Aramco is adding

900,000 b/d of net rening capacity over the next three years

through stakes in new reneries at Jubail, Yanbu and Jizan.

The UAE will have another 600,000 b/d of rening capacity

at Ruwais and Fujairah over the next two years. KuwaitsKPC plans to build 680,000 b/d of capacity by 2019, although

its commitment to Sinopecs 300,000 b/d Zhanjiang renery

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 PdVs

policy in the 1990s of rening 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 awed 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

proles. 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 nancial 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 nanciers 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

rm conrms 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

Frances BNP Paribas and HSBC when looking to buy Rosneft crude.The US and EU imposed new sanctions over Russias involvement

in Ukraine after the shooting down of Malaysian Airlines ight MH17.

These include measures that seek to limit Rosnefts 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

nancing 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 Russias leading independent gas producer Novatek,market participants say, although this could not be conrmed.

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

rst half of this year, taking cargoes for its 127,000 b/d Marifu

and 180,000 b/d Muroran reneries.

Reners have become more active participants in ESPO

Blend sale tenders over the past year, as the market has

become more transparent. But if some reners shy away from

spot tenders because of sanctions, trading companies such asGlencore and Vitol could try to take on larger positions.

Uncertainty over nancing 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-nancing 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.


21/23

illuminating the markets

Petroleum


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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 rm 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 rm 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/blOil 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

renery shutdowns hit midcontinent demand. WTI was down by

$7.83/bl on a front-month basis, after August expired.

Sour crudes rmed 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 Iraqs 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 signicantly 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 renery 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 re and shutdown at CVR

Energys 115,000 b/d Coffeyville renery in Kansas and the start of

maintenance at Phillips 66s 356,000 b/d Wood River, Illinois, plant.

Heavy falls in US midcontinent crude prices reect the

regions 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 weeks WTI

falls are partly the result of the Coffeyville renery re, 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, reneries

go into turnaround and new pipelines bring more crude to Cushing.


22/23


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