No peak in sight for climbing US jet exports to Latin America
By Daron Jones; Matthew Kohlman / Platts
Petroleumworld 04 16 2019
US jet fuel exports to Latin America soared to record highs in 2018, with Mexico cementing its role as the number one overseas destination for US jet.
And that trend is set to continue, sources say.
"Exports to Mexico are quite heavy because Mexico is depending upon US jet for approximately 60% of their supply right now," said a US Gulf Coast distillates trader.
Jet fuel traveled from the USGC to Mexico at the highest rate ever in 2018. Mexico imported 20.45 million barrels of jet from the US last year, up from 14.87 million barrels in 2017, according to the latest data from the US Energy Information Administration.
Latin American countries not only imported more jet in 2018, they paid more, as well. S&P Global Platts assessed USGC jet fuel at an average of $2.0269/gal in 2018, compared with $1.5584/gal in 2017.
MEXICO TOPS CANADA AGAIN
The 34% year-on-year rise kept Mexico firmly in the top spot of US jet destinations, a position it first secured in 2017.
Canada, traditionally the top overseas recipient of US jet fuel, imported 13.65 million barrels in 2016, compared with Mexico's 12.2 million barrels. But Mexico first edged Canada in 2017, taking in 14.87 million barrels to Canada's 13.99 million barrels.
Mexico's 20.45 million barrels in 2018 easily eclipsed Canada's 18 million barrels.
Mexican imports of jet fuel in 2018 accounted for a higher percentage of the country's demand than ever before, Mexican government data show. Imports accounted for around 64% of the country's domestic jet demand in 2018, up 11 percentage points from 2017. Last year, jet fuel imports averaged around 56,000 b/d, while Mexico's demand for the product averaged 86,000 b/d.
Mexico's reliance on the US for more than half its jet fuel supply is a relatively recent phenomenon. Prior to 2014, Mexican imports averaged less than one jet fuel cargo a month. However, aging refinery infrastructure and a lack of storage have increased the country's dependence on outsourced jet fuel over the last five years.
"They've got real issues," said a USGC jet fuel trader. "Theft, corruption, too few tanks."
OTHER COUNTRIES INCREASE INTAKE
Panama was the second largest jet importer from the US among Latin American nations, bringing in 6.3 million barrels in 2018, slightly less than its 6.37 million barrels in 2017.
Chile was third among the recipients of US jet, taking 2.53 million barrels last year, compared with 2.92 million barrels in 2017.
Other countries saw a year-on-year escalation in their imports. Brazil took 2.45 million barrels of US jet in 2018, up from 1.72 million barrels in 2017, the EIA data showed.
The Dominican Republic jumped to 2.42 million barrels from 2.1 million barrels in 2017.
Costa Rica, Argentina, Guatemala and Honduras also saw significant increases in their jet imports in 2018.
December in particular was a notable month for other Latin American nations, according to the EIA.
Curacao, just north of Venezuela and its troubled refineries, brought in its biggest US jet shipment ever in December at 140,000 barrels. December also saw Trinidad's first full cargo arrive, at 331,000 barrels, just after the country shut its Petrotin refinery.
El Salvador, Antigua and Barbuda, and the Bahamas all had record jet shipments from the US to close out 2018.
TOTAL US EXPORTS CLIMBING HIGHER
The increase in flows to Latin America was indicative of a more widespread rise in US jet exports in 2018. Total US jet exports reached a record 81.2 million barrels, up from the previous high of 67.16 million barrels in 2017.
So far in 2019, total US jet fuel exports have averaged 212,000 b/d, nearly double the 120,000 b/d average for the same period in 2018.
However, the average price per gallon has dipped slightly over the first two months of 2019. Platts assessed USGC jet at an average of $1.8441/gal in January and February, down from $1.9091/gal in the same period in 2018.
As for the US' number one customer, players expect Mexico to get most of its jet fuel from the USGC for the foreseeable future.
"Their jet imports should go up, especially since BP, Repsol, Marathon and Total have entered into agreements to import products and build infrastructure," said the jet trader.
"So, if I was guessing, jet imports should increase by 5% each month, month on month, for rest of 2019. And 2020 will most likely see an immediate 30% increase after more tankage comes online," the source said.
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Story by Daron Jones; Matthew Kohlman; Edited by Jeff Mower from Platts / SPGlobal.
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