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US East coast
Wholesale prices in the East coast moved higher as supply was tight and a deal for August delivery indicated supply for that month will be more expensive, when available. One wholesale seller says it completed a deal for PG 64-22 at $750 fob in New Jersey. Another wholesale deal was heard done at $700 fob for a PG 64-22 quality asphalt on the southern Atlantic coast.
New England cif barge prices were still talked at $620-630, but one participant in the market says he has heard from multiple sources that prices could be headed up by $100 because of tight supply. Canadian asphalt is not moving into New England, and this week's letting for August government paving work in Quebec suggested that rapidly rising prices in Quebec will prevent exports to New England in the short term.
One supplier boosted its western New York rack price to $675. Pittsburgh racks for one supplier are still at $600, but could rise even before 1 August, the supplier says. Some hot mix contractors in the area have been heard attempting to postpone work into August in hopes of narrowing the gap between the prices they have to pay for supply and the index-related price they can charge for paving work. Both New York and Pennsylvania indices are expected to rise for next month.
A supplier in Maryland was keeping its price for PG 64-22 at $675, while the price quoted for flux was at $580.
Traders are attempting to define the effects of Sem Group's bankruptcy on the regional market. One supplier says it has already put customers on allocations because of the general tight supply. It will have no extra asphalt to supply to customers that had been pulling supply from Sem Group. On the flip side, some of the asphalt Sem Group was buying for its system will presumably move back onto the market, as Sem Group's buying ability is significantly diminished or worse. But the freed up volume may not appear on the market for weeks. So the timing of the supply and demand effects of Sem Group's bankruptcy will have a significant effect on the market.
One East coast supplier says it is now moving volumes from racks in a range from $675-700 in a territory from Virginia north to New York. The same supplier had its racks at $675 south from Virginia to Florida.
Another supplier had Jacksonville and Tampa, Florida prices at $665, and another supplier had some racks at $650 in the region.
One East coat asphalt refiner says it has bought incremental heavy crude to allow its refineries to run full out. But shortages of asphalt were developing in the region. Virginia and New Jersey were two areas said to be experiencing particularly tight availability of asphalt for spot sale.
US Gulf coast
Argus wholesale barge ranges for the eastern and western US Gulf remained at $590-600, based on the last deal known to have been done, which involved the sale of PG 67-22 at $600 for July delivery. No sales for August delivery have been heard done.
Refiners were still working to understand their wholesale supply availability for August, as a strong flow of requests came in for supply deliverable both inside and outside the US. Coker economics are strong and asphalt prices are nowhere near the level that would be required to prompt a refiner to divert residual oil to asphalt before coker throughputs were maximised.
Given the tightness in supply, wholesale asphalt prices were climbing up to the level of rack prices, destroying delivery margins. “No one will sell wholesale for less than rack,” one US Gulf coast trader says.
One supplier's rack price in northern and central Alabama climbed by $50 to $605 as of 21 July.
No changes were seen in rack prices from coastal Alabama west through Texas. One Texas supplier said it was staying out of the bidding in an upcoming state letting because of lack of supply available. He said the company has room to boost its asphalt output somewhat, but has not seen economic incentive to do so. The supplier is holding its rack prices steady, but says that prices could rise again soon.
New Mexico rack prices were still seen at $625-650.
US Midwest
As in the rest of the nation, supply of wholesale asphalt is tight in the US mid-continent. Suppliers were focusing their efforts on meeting contractual obligations to term clients, and had little if any asphalt for spot sales. One supplier foresees prices approaching $700 in August, and says sales for August delivery are being made in a wide range of $600-700.
After a week of dramatic price rises on retail rack prices in the week ended 18 July, the market appeared to be taking a breather as the month came to a close. New state index prices for August were in the process of being set and other fundamentals were being assessed. Argus assessed rack prices for the week ended 18 July were up by $20-85, or 3.1pc to 14.4pc. Those new, higher rack prices were sticking as overall supply remained tight.
Normal flows of US mid-continent asphalt into Ontario and other parts of Canada appeared to be essentially non-existent.
US Rocky Mountain & West coast
Wholesale asphalt supply in the Rockies remained exceptionally tight. Suppliers were providing material to long-term contracts and traditional customers, but not taking on additional commitments. One Montana refiner and asphalt seller says it is getting offers to buy wholesale asphalt at more than $600 fob, but the refiner says it was not selling at that level. A frequent buyer of wholesale asphalt from Montana says he heard refiners talking about the need to beat coker economics in order to provide incremental barrels — a calculation that one trader says will put the wholesale asphalt price at $725 fob Montana.
Montana has a letting scheduled for the week of 27 July, and one marketer in the area says he expects retail quotes in a range of $600-$650 for PG 58-28.
In the Pacific northwest one asphalt supplier has indefinitely suspended asphalt supplies from 18 July, diverting residual oil to the production of bunker fuel.
One asphalt seller has notified customers that its rack price in Portland, Oregon will rise from $600 to $700 with effect from 1 August. The seller says it is not bidding on local lettings because of limited availability of supply.
Northern California asphalt prices continued to lag those in the southern part of the state, as one northern supplier held to lower prices. The supplier moved its price up to $655 with effect from 17 June, but that price still lagged racks of another northern supplier, which was holding at $700 for PG 64-10. Suppliers say there is no sign of a resurgence in private asphalt use for residential real estate development.
In Arizona and Nevada, the market was “out of sequence” as some suppliers are changing prices weekly or bi-weekly while state index numbers were generally set monthly. One key supplier says he is keeping prices steady for the rest of July, but conceded a general upward trajectory on prices would probably take racks higher in August. One supplier has already informed customers that it will raise prices in Phoenix by $185 to $885 for PG 70-10 and PG 64-22.
Canada
?August paving contract awards, announced on 24 July by Quebec's ministry of transportation (MPQ), appear likely to push posted prices and spot rack prices dramatically higher than July levels. Work for paving with conventional PG 58-28 asphalt was awarded at C$840/t ($823/t), as compared with current postings in a range of C$682-718/t. The price jump for the conventional paving grade was seen as a signal to the entire asphalt complex in eastern Canada.
Other grades with contracts awarded in the MPQ tender saw their prices jump commensurate with the climb of conventional asphalt. PG 64-28 was awarded at C$835/t, with other bids registered at C$890 and C$900. PG 64-28 has been running at a premium of C$40 to conventional PG 58-28.
Another premium grade, PG 58-34, was awarded in the MPQ letting at C$875, with other bids at C$920. Recent postings have PG 58-34 at a premium of C$80 over conventional. PG 70-28 was awarded by MPQ for August at C$980; its posted prices for July have been running at C$140 above conventional.
Two other grades were awarded work by MPQ for August. PG 64-34 was awarded at C$980, while PG 58-34 HRD was priced at C$950.
No new posted prices emerged by press time on 25 July, but traders say the major suppliers are evaluating the results with an eye to adjusting their posted prices. The strong MPQ prices are widely read as a somewhat overdue reflection of the severe tightness of supply of asphalt in eastern Canada. Imports that normally arrive from the US mid-continent and western Canada have not been generally available because of supply shortages in those areas. In Toronto, rack prices had already moved to as high as C$830.
No new deals or lettings were heard done in western Canada. Prices moved up in Alberta and British Columbia earlier in July, and the availability of asphalt was being affected by the same factors in play in the US Rockies, including new cokers on line and refinery run cuts because of poor gasoline margins.
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