Argus Americas Asphalt Summit

May 03, 2011

I was able to attend the Argus Americas Asphalt Summit held in The Woodlands, TX at the end of March. Here are a few highlights from the meeting:

  • For the first time in recorded history, asphalt demand in both the US and Canada fell below production.  Increased production came about as a result of a huge influx of Canadian Heavy crude to the US market.  Heavy crude refining  expansions at BP Whiting (+260 kb/d,Q22013),WRB Wood River (+120 kb/d, Q42011), and Marathon Detroit (+80 kb/d,Q2012) will undoubtedly change the crude oil landscape in the US over the next couple of years.  In addition, significant heavy crude pipeline expansions needed to feed these huge refinery expansions are either completed or underway.
  • Asphalt pricing remains above its historic average.  Why is this? One major contributor is asphalt exports. In 2010, exports grew over 11%.  The international markets are willing to pay higher prices for US/Canadian asphalt.    Another factor is our slow economy, which results in lower refinery utilization.  The refineries in the US are running to meet fuel demand. If fuel demand is low, then the refineries are slowed to better match up supply and demand.  Since AC is a by-product of fuels, lowered utilization results in lowered AC supply – which puts upwards pressure on AC pricing once demand begins to trek back up.
  • Cokers have been installed in about every refinery across the US. Hunt, Marathon, and Total started up new coker capacity in 2010. Conoco Phillips, Motiva, and Marathon plan to do the same in 2011.  What does this mean? With a coker, a refinery can “upgrade” 94.40% of a cheaper heavy crude to a light fuels like kerosene, gasoline, and diesel.  Without the coker, they can only yield 37.40%. As long as gas prices stay high, the asphalt kit on the refinery will have to compete with its alternative value as coker feed.  This feedstock competition, along with the suppy/demand balance and increasing exports will ensure that asphalt pricing in the US remains at a high level into the foreseeable future.

Shameless plug: Evotherm may help you lower the AC content of your mix and/or use more recycled asphalt pavement.

Author: Dean Frailey