Asian Clean Products Increasingly Heading to Mexico

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Lower crude production, underinvestment and lack of refurbishments in the Mexican downstream sector has forced the country to increasingly become an importer of refined products. Despite having the capacity to refine some 1.6 million barrels per day, a spotty track record for Mexican energy company Pemex has left the country far from energy self sufficiency. The government of President Andres Manuel Lopez Obrador has vowed to achieve energy independence through improvements in the refining sector, though the goal has so far been unattainable.

As a result, Mexico relies on gasoline and middle distillates imports, especially from the United States, to meet local demand for fuels. Through October, Mexico’s waterborne imports of gasoline and middle distillates from the US averaged 392,000 barrels per day and 224,000 bpd, respectively.

Of late, however, we have seen Asian refiners in China and South Korea sending more refined products to Mexico. In the first 10 months of the year, the country imported 33,000 bpd of gasoline from China and South Korea combined, compared to 19,000 bpd during the same period last year. Meanwhile, Mexican imports of middle distillates from both countries averaged 13,000 bpd through October, compared with 5,000 bpd last year.

Although Asian clean products only represent a fraction of Mexican imports, this new trend is being amplified by higher Chinese refinery runs and a greater availability of light distillate barrels from Asia in general. As East Asian refiners push more clean products onto the global market, they are reaching further afield, and in greater volumes.