US president-elect Donald Trump's threat to impose tariffs on Canadian goods could restrict asphalt supply and lift prices for US buyers this year.
Trump announced plans to put a 25pc tariff on all imports from Canada and Mexico after he takes office on 20 January.
Asphalt market participants said a potential tariff on Canadian imports could just be a "bargaining chip," and the Canadian Association of Petroleum Producers noted the tariff would push energy costs higher for American consumers.
But Trump doubled-down on his threat on 7 January, insisting "we are not treated well" by Canda. If he sticks to his plan, market participants fear asphalt prices could "go through the roof." Kpler data show about 73pc of US Atlantic coast waterborne asphalt imports originated in Canada in 2024. The US east coast is net short asphalt, with just one domestic producer — independent refiner PBF Energy. PBF shut a crude distillation unit in late October because of poor refining economics.
East coast waterborne imports of Canadian asphalt reached their highest level in June 2024, according to Kpler data going back to 2017. This helped push cif New York prices down by $95/st from June to early October, an unusual trend for the summer and early autumn.
Railed asphalt volumes could also be affected, with monthly US imports of Canadian railed asphalt totaling 5.23 mn bl through the first 10 months of 2024, US Energy Information Administration (EIA) data show. A potential trade war and possible labor disputes could also cut into asphalt volumes.
US importers could turn to other supply sources, but some supply uncertainty stretches across the Atlantic with multiple refinery shutdowns in the Mediterranean expected in 2025. This comes, however, alongside weaker asphalt demand.
Rising asphalt flows from Venezuela could also help moderate affects from potential US tariffs. But market participants are more cautious of Venezuelan supply and the potential return of sanctions under Trump.
The planned restart of an asphalt unit at Curacao's idled 335,000 b/d Isla refinery this year could also slightly temper a potential supply shock.
Feedstocks uncertain
Trump's tariffs could also alter heavy crude flows and reduce US asphalt production.
Canada is the top supplier of crude to the US and accounts for 65pc of all crude runs in the midcontinent.
Monthly PADD 2 imports of Canadian crude oil totaled about 863mn bl in January-October 2024, up by 8pc compared with the same period last year, according to EIA. Meanwhile, asphalt production in the region rose by about 7pc over the same period.
Potential tariffs could divert Canadian crude from the US to Asia-Pacific via the Trans Mountain Expansion pipeline and boost heavy crude costs for US refiners.
Further south, potential tariffs on Mexican imports could also hit asphalt production. Mexico is the second-largest supplier of crude to the US and produces a heavy grade with most volumes landing on the US Gulf coast.
