Already strong US gasoline exports are likely to remain high into the fourth quarter, as refineries in Mexico, the largest buyer of US gasoline, are expected to operate well below capacity, an S&P Global Platts analysis showed Wednesday.
The US exported 1.16 million b/d of gasoline last week, marking the second straight week above 1 million b/d, US Energy Information Administration oil data showed Wednesday.
The EIA does not report exports by destination on a weekly basis, although the agency’s most recent monthly data shows Mexico as the single largest buyer of US gasoline, taking roughly 70% of finished gasoline exports in July.
The US is well-supplied with gasoline, which suggest more could be available for export. Stocks at 234.16 million barrels last week were 7% above the five-year average, the EIA data showed.
The bulk of US gasoline exports are shipped from the US Gulf Coast, where inventories have fallen in recent weeks, but are still showing a slight 2% surplus to the five-year average.
Exports to Mexico are “likely putting [the weekly EIA figure] over the top,” said one US gasoline trader. The Pacific Northwest “has been exporting quite a bit, supporting that market,” he said.
PEMEX REFINERY WOES
Despite flat demand growth expectations, Mexican imports of gasoline are expected to remain high as Pemex refineries continue to face challenges.
In the first week of October, state oil company Pemex processed a combined 535,470 b/d of crude, reflecting a record low of 32.3% of capacity, an operational report viewed by Platts shows. That was down from 804,200 b/d in early August.
This summer, Mexican refineries had 78 plant stoppages, doubling the number of stoppages experienced during this period a year ago.
Data from Mexico’s Energy Secretariat (SENER) shows that Mexico’s six domestic refineries produced an average of 216,200 b/d of gasoline from June to August, down 31% from the prior three-year average.
Pemex’s total gasoline production in the first week of October was 206,000 b/d, down from 237,000 b/d in September.
A source at the Salina Cruz terminal said so far only three 200,000-barrel cargoes of gasoline have been produced from Pemex’s 330,000 b/d Salina Cruz refinery — Pemex’s largest — down from nine cargoes in September and 13 in August.
“In the last two months, we have seen a considerable drop of gasoline cargoes,” he said.
Still, demand is expected to remain flat. Even as Mexican gasoline consumption typically rises during the fourth quarter because of increased driving during the holidays, higher pump prices this year are expected to keep demand in check.
S&P Global Platts Analytics is forecasting flat year-on-year demand at 820,000 b/d in the fourth quarter.
HIGHER PEMEX RUNS IN DOUBT
Platts Analytics expects fourth-quarter crude processing could range from 500,000 b/d to 680,000 b/d depending on if Pemex decides to operate its 220,000 b/d Salamanca and 190,000 b/d Madero refineries.
Salamanca is expected to be shut down for major maintenance work over the coming weeks.
A Pemex spokesman said the 285,000 b/d Minatitlan plant will increase its crude processing levels to around 100,000 b/d by the end of the month from 30,000 b/d currently. Minatitlan will not be able to surpass this operational level as the refinery’s coker needs to be modernized, the spokesman said.
The Madero refinery has been down since July and also needs a coker upgrade. Pemex said the plant will operate at a minimum level to avoid financial losses, although sources at SENER were uncertain the plant would be restarted this quarter.
Pemex could also boost runs by 30,000 b/d if it is able to import light sweet crude. The company is currently holding a tender for 2.1 million barrels of Bakken crude for November and December delivery, to run primarily at Salina Cruz.
While low refinery runs present an clear opportunity for US refiners, it is worth pointing out that Mexico has diversified its import slate. Between June and August, for instance, Mexico imported 2.5 million barrels of gasoline from China.
Platts Analytics calculations show European gasoline has become more competitive in Mexico, particularly given the weakness in the New York Harbor, a key destination for European gasoline.
Source: PlattsPrevious Next