Spot USGC coke may remain tight in near term

: Petroleum coke
24/12/04

US Gulf coast petroleum coke prices could gain further support in the near term from narrowing heavy-light crude spreads and lower run rates at some US refineries, particularly because of higher demand for January-arrival coke.

December-loading spot coke supply has been declining since early October, when sellers began to take advantage of higher bids for cargoes that would arrive in the new year compared with those arriving in November or December. Dwindling December-loading supply lent support to fob US Gulf coast 6.5pc sulphur coke prices, lifting them to $60/t fob on 27 November from $50/t on 2 October. Demand for December loadings continues to buoy prices for the high-sulphur specification, with a US Gulf coast refinery this week selling the material via tender in the low-to-mid $60s/t fob for loading in late December. Some coke producers were planning to participate in this tender.

One refiner is considering delaying a December laycan to January because its output is falling behind expectations, saying that some refineries are running at reduced rates because crack spreads are not particularly strong. US retail gasoline prices fell to three-year lows this week, while crude prices have been relatively high. The Mars 3-2-1 crack spread on the US Gulf was $1.63/bl below a year earlier on 26 November.

Despite this, refinery runs nationwide rose to a 13-week high of 17.1mn b/d last week from 16.6mn b/d the prior seven-day period. This level of downstream throughputs has not been seen at this time of year since 2018, according to Energy Information Administration data.

A weaker yield for heavy products could explain why market participants are reporting tight supply despite refinery runs overall being seasonally strong. Heavier crudes are losing some of their price competitiveness compared with lighter, sweeter crudes, which crimps profits for products at the lower end of the barrel. The price discount for heavy Western Canadian Select crude to the Nymex calendar month light sweet crude index reached a midpoint of $3.525/bl — the lowest level so far this year — on 21 November.

The Argus US Gulf coker yield — a measure of total value of products from a coker — has fallen to only $385/short ton as of the latest assessment in late November, down from $439/st in late June. And it is now even with the fob US Gulf asphalt price at $385/st, meaning there could be an incentive for refiners to sell asphalt rather than run bottoms through their coker units. The asphalt price was $5/st above the coker yield on 15 November.

Further adding to the potential for thinner supply, some refiners, including PBF and Marathon, said they would reduce fourth-quarter refinery run rates from the same period last year and from July-September levels. Coker work at BP's 435,000 b/d Whiting, Indiana, refinery also stretched from late August to November, reducing supply.

Some US refiners anticipate that planned refinery closures could boost margins, perhaps as early as next year. But refiner LyondellBasell, which is closing its 264,000 b/d Houston, Texas, refinery starting in January, said on 1 November it expects a "sharp decline in gasoline crack spreads" in the fourth quarter, which may continue to weigh on coke output.

Some of the near-term tightness could be related to sellers' strategies, as traders still have December-loading coke to offer and have been holding back volumes in hopes of getting higher prices.

By Delaney Ramirez and Lauren Masterson

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24/12/18

Alabama lock expected to reopen late April

Houston, 18 December (Argus) — The main chamber of the Wilson Lock in Alabama along the Tennessee River is tentatively scheduled to reopen in four months, according to the US Army Corps of Engineers (Corps). The Corps expects to finish phase two of dewatering repairs on the lock on 20 April, after which navigation can resume through the main chamber of the lock. The timeline for reopening may shift depending on final assessments, the Corps said. Delays at the lock average around 12 days through the auxiliary chamber, according to the Lock Status Report by the Corps. Delays at the lock should wane during year-end holidays but pick up as spring approaches, barge carriers said. The main chamber of the Wilson Lock will have been closed for nearly seven months by the April reopening after closing on 25 September . By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Alabama lock to remain closed until spring

24/12/17

Alabama lock to remain closed until spring

Houston, 17 December (Argus) — The US Army Corps of Engineers (Corps) has determined that the main chamber of the Wilson Lock on the Tennessee River near Florence, Alabama, will remain closed until spring 2025 as repairs continue. The Wilson Lock, the first lock on the Tennessee River, closed on 25 September after cracks in the lock gates on both the land and river sides were discovered. The main lock was closed to prevent further damage in the main chamber, although the auxiliary chamber was kept open for navigation. The Corps had been eyeing an earlier opening date for the main chamber since the start of November. Although months of repairs have taken place, the Corps resolved to keep the main chamber closed to preserve the lock and maintain personnel safety. The Corps, in partnership with the Tennessee Valley Authority (TVA), is still assessing the root cause of the cracking. A second de-watering of the gate is scheduled for the first three months of 2025 to repairs. No official date has been set for the lock reopening, although some barge carriers have heard of a late April opening date. A regular 15 barge tow has endured 5-6 days of delay through the lock on average, according to carriers. The Corps' Lock Status Report on the Wilson Lock reported a nearly two-week delay for tows navigating through the lock. This has been costly for shippers by forcing them to pay delay fees. Wilson Lock is the second lock in Alabama to undergo a lengthy closure this year. Most lock and dams along the US river system are over 70 years old, likely resulting in more closures in the coming year. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US rail group optimistic about 2025 rail demand

24/12/12

US rail group optimistic about 2025 rail demand

Washington, 12 December (Argus) — US rail volume is likely to start strong in 2025, but railroads will need to navigate changing federal policies, the Association of American Railroads (AAR) said. Volume next year hinges on a few key factors, including the resilience of consumer spending, strength in the labor market, and the trajectory of inflation and interest rates, the group said. Railroads will need to remain vigilant as these economic indicators will be critical in helping assess rail traffic and broader economic health in the months ahead, AAR said. "Strong intermodal growth and stable consumer demand offers reasons for optimism," AAR said. "But railroads and the economy alike must navigate evolving policies and potential disruptions" as the US enters 2025 under a new administration, the group said. The AAR'S optimism comes as rail traffic in November "while by no means stellar, suggests that the broader economy remains on stable footing", AAR said. US intermodal rail volume set new records in November. The increase reflected strong consumer demand following job gains that pushed increased spending, AAR said. Intermodal traffic is made up primarily of consumer goods shipped in containers between different modes of transportation, although some scrap metal and specialty agriculture products ship this way. US railroads loaded an average of 282,000 intermodal containers and trailers per week, up by 11pc from a year earlier. That was the highest weekly average for any November since AAR began tracking intermodal data in 1989. Carload traffic fell by 3.8pc compared with November 2023. Carload traffic is primarily made up of commodities. Coal was the "biggest problem", AAR said. US railroads loaded 15pc less coal last month compared with a year earlier, while year-to-date loadings were down by 14pc from the same 11 months in 2023. If coal were excluded, monthly US carload traffic in November would have notched a 10th consecutive year-on-year increase. Industrial products volume was down by 1pc from a year earlier. Manufacturing is a major driver of US carload traffic, and that sector remains sluggish, AAR said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US House panel approves river infrastructure bill

24/12/06

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

First Dos Bocas coke ships to Brazil, India

24/11/19

First Dos Bocas coke ships to Brazil, India

Houston, 19 November (Argus) — Brazil and India are the first destinations for the green petroleum coke Mexico began exporting from its new Dos Bocas refinery in September, according to data from global trade analytics firm Kpler. Mexico exported almost 60,000t of green coke in September from the Dos Bocas port in two shipments. Nearly 31,000t was sent to Brazil, and the other 29,000t went to India. Both ships traveled to the US Gulf to top off with more coke before traveling to their destinations. Another vessel loaded 12,000t in October and discharged at the Progreso terminal in Yucatan, Mexico. Mexico has not been a major coke exporter over the last decade or so, as it has consumed more than it produces. But higher coke production in the country, following the start-up of Mexican state-owned refiner Pemex's new 340,000 b/d Olmeca refinery near Dos Bocas, and lower domestic demand, has led to an increase in exports recently. Mexican customs reported 124,600t of coke exports in August, according to the latest available data from Global Trade Tracker. This was the first time the country reported significant coke exports in 10 years. Kpler data show 111,400t of coke shipped on two vessels from the Altamira port to India, Portugal and Morocco in August. And a small quantity of less than 10,000t from the Madero port topped off a 45,000t cargo from Texas City, Texas, in October, heading to Rotterdam, Netherlands. The Olmeca refinery began operations in August, and Pemex chief executive Victor Rodriguez said he expects it to run at nameplate capacity by the end of November . The refinery is expected to produce 1,800 t/d of coke in 2025 and is primarily export-focused, according to Mexican energy ministry Sener. PMI offered roughly 20,000t of coke from Olmeca in a spot tender issued 23 August. It was not immediately clear which of the September shipments came from this tender. Pemex's coke can occasionally have a slightly higher sulphur content than typical US Gulf high-sulphur coke, which may limit the number of interested buyers. But sulphur content is not an issue for most Indian buyers. The coke shipped from Mexico to India in September was to be tested by the country's cement makers , but it is still uncertain if the coke will suit their needs. It is possible that the higher-than-average HGI of Mexican coke could result in handling losses and operational challenges, especially during India's monsoon season. Coke production at other Pemex Mexican refineries has also increased over the past year. Total output across Pemex's Mexican system rose by 45pc to 1.19mn t in the first half of the year, according to data from the refiner. The Cadereyta refinery's coker increased production by 35pc year over year in the first half. Pemex also has plans for large-scale maintenance projects to revamp its older refineries , such as the Cadereyta, Salamanca, Minatitlan and Ciudad Madero refineries. A new coking unit at Pemex's Tula refinery started at partial capacity in October, and one at the Salina Cruz refinery is expected to be brought online sometime during Mexico's current presidential administration, which is set to end in 2030. The timeline for the Salina Cruz coker is currently uncertain after multiple construction delays. Higher coke exports from Mexico may also be related to lower demand for coke, as well as cement, and more competitive fuel prices in the country. Mexico-based cement maker Cemex had plans to reduce coke consumption earlier this year, as costs for natural gas have significantly declined. Cemex and other domestic buyers have turned to natural gas in efforts to decrease fuel costs and lower carbon emissions. Cement makers are also increasing their use of alternative fuels, such as refuse-derived fuel. So far in 2024, alternative fuels have accounted for 37.5pc of Cemex's fuel mix. This is down by 2.5 percentage points from the same period last year. By Hadley Medlock and Lauren Masterson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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