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RE: CHS Coker Project Nearly Complete (Jan08)

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Charles Randall

Most of the articles have made it clear that some asphalt would continue to be produced, so the new coker will not eleminate all the asphalt to external markets. And yes the coker is going to shift a large portion from asphalt to gasoline/diesel products depending upon the economics.  The goals here were to be able to run heavier/cheaper crudes and shift more product into higher valued fuels.
As the various refinery coker products move more fuel oil & asphalt products into transportation fuels, the surplus volume in both fuel oil and asphalt markets will be eleminated & prices will rise to market demand values.  It should be noted that asphalt has increased from ~$180/mt at end 2005 to $240/mt in 2006 & up to $320/mt in 2007 for some regions. Once asphalt / fuel oil reaches +$250/mt it starts competing with $2.70/gal. gasoline prices and so economics for coker start to drop….. but margins were at all time highs in 2006.  Also some of the price rise in asphalt / fuel oil is part of the linked price relationships & not necessarily from demand driven increases.
This answer your question? Regards

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