Market Update: Our 2018 Wish List

 

I know, I know … it’s the holiday season and everyone’s busy running around. With competition for eyeballs at an all-time high, I’ve decided to keep the year’s final update a bit shorter. So, whoever is reading … the CRE, Pemex, Santa Claus, anyone … please find below my wish list for 2018.

 

Less Volatile IEPS Tax

In a market where margins are tight and volatility is high, it is more than cliché to say that every penny counts. Our hope is that 2018 will bring more consistency to the IEPS tax and thereby relieve the market of one floating risk component.

 

Continuation of Open Season for Pemex Assets

Truly competitive market prices can only be achieved with sufficient diversity of asset ownership. Mexico won’t enjoy true liberalization until Pemex is challenged by a competitor with material assets. At the same time, the open season train seems to have come to a screeching halt since the initial auction in May. Reopening this process will further promote the deregulation process.

 

Development of Infrastructure

Projects to add shiny new assets are underway on the coasts, along rail lines, and at nearly every corner in Mexico’s major metropolitan areas. Many of these assets will come online in 2018, and as they do, Pemex’s longstanding monopoly will slowly begin to dissolve. Even still, the need for assets is huge, and for every tank, pipe, pump and retail station constructed in 2018, there needs to be 2-3 more added in the following years. More assets please!!

 

Gasolina, Gasolina, Gasolina

The import game for independent marketers has primarily revolved around diesel in 2017—and it’s been a great year. But watch out in 2018 … gasoline is coming! To date, the gasoline trade has felt more of the impact of the IEPS tax. Add to this the more technical handling requirements driven by vapor emissions. Have I mentioned the shortage of quality assets in Mexico? Regardless, the gasoline import game has been slow to develop, but like all supply/demand imbalances, time and money solutions are sure to come.

Interested in talking to our International markets team? Contact us today!

And, lest I forget: Feliz Navidad y Prospero Ano Nuevo!

 

Best,

Chad Smith
Senior Vice President of Terminal Operations