By Robert Harvey and Georgina McCartney
LONDON/HOUTS (Reuters) – The trading rates of US President Donald Trump for the import of Canadian and Mexican oil will offer European and Asian refineries a competitive advantage against their American rivals, analysts and market participants told Reuters.
Trump ordered 25% rates for Canadian and Mexican input on Saturday and 10% on goods from China from Tuesday to a national emergency situation about fentanyl and illegal aliens who arrived the US, said Civil Servants of the White House. Energy products from Canada will only have 10% duty, but the import of Mexican energy will be charged the full 25%, they said.
The rates for the two biggest sources of the rough import of the US will increase the costs for the heavier rough figures that American refineries need for optimum production, according to sources from industry, which reduces their profitability and possibly forced production cuts .
This offers refineries in other markets the opportunity to make a difference. The US is currently an exporter of diesel and importer of gasoline.
“Less exports of the American diesel could support European margins, while more export opportunities can remain in the strongly under pressure petrol market,” said David Wech, Consultancy Vortexa.
“So in general a positive one for European refineries, but probably not for European consumers,” he added.
“The European margins can improve because the American northeast will have to import more gas,” said a director of a brokerage. “I think European and Asian refineries are the big winners.”
Rates would probably also force rough sellers to find the prices discount to find buyers, said Matias Togni, founder of Analytics Firm Next barrel. Asian refineries are well ready to suck on those discounted Mexican and Canadian crude oil, something that could also achieve their profit margins, he said.
Asian refineries can get the competitive advantage because they have the equipment to run heavy crudes and are also busy increasing their run rates, said Randy Hurburun, head of refining in energy aspects.
The Trans Mountain Pipeline extension (TMX) in Canada, which was launched last May, means that the pipeline can now send 590,000 barrels a day to the Canadian Pacific Coast.
Higher TMX shipments to China can replace the import from Venezuela and Saudi Arabia, according to Handels sources.
Asia-Pacific refineries can also use opportunities for the fuel arbitration of the American west coast, which can be affected by higher raw material costs incurred by the purchasing of crude oil from further road, Vortexa’s Wech added.