New
York,
9 October (Argus)
Singapore
Offers were heard for cargoes as low as $260/t on a fob basis. Prices for cargoes on trucks to Malaysia also fell as Singapore sellers faced with a weak export market sought to dispose cargoes in the neighbouring country. Indonesia and Australia, however provided some relief for Singapore sellers. A 5,000t cargo loaded around the third week of September for Australia was believed to have been bought for just under $290/t on a fob Singapore basis. But the same buyer, which is believed to be looking for another cargo, is expected to be able to conclude a similar cargo for October lifting at around $25-30/t lower. The lack of interest in the Chinese market saw shipowners scale back freight costs. A voyage from Singapore to Huangpu, for example, would cost a shipper around $30/t in the current market, compared with $50/t mid August.
Asphalt prices slipped slightly despite an increase in fuel oil prices, which edged up on strong fundamentals even as crude futures sank. High-sulphur fuel oil supplies continue to fall, while demand has improved with fresh requirements. Refining margins against benchmark Dubai crude swaps registered their best showing in four months, reflecting the rising strength of fuel oil against crude.
Malaysia
Project owners hoping for road construction contracts to be awarded under the Ninth Malaysia Plan 2006-10 continued to wait fruitlessly. But while demand was muted, supply was largely restricted to one supplier from Singapore and Malaysian state-run oil company Petronas. Prices ranged between 950-970 Malaysian ringgit for asphalt delivered into the Klang Valley. Competition looked set to heat up in the Malaysian market with new entrant Kemaman Bitumen possibly starting supply by as soon as January.
Thailand
Thai sellers continued to hold out for high prices despite inventory building up as the uptake from China proved to be lower than expected. TPI asked for $270-272/t on a fob Thailand basis, but traders deemed this unrealistic given that Chinese sellers were reselling Thai cargoes, complete with freight access. No offer levels were heard from these Chinese sellers, but industry sources suggested that Thai sellers could be more realistic at around $265/t. A Thai cargo was heard to have been delivered last month into central China at around $300-305/t.
Indonesia
Indonesian demand was strong — a typical situation in the second half of the year when budget funds are available for construction purposes. Buying interest is also high ahead of the Muslim Eid festival around the last week of October, which typically sees a mass migration of people from the cities back to the villages. But imports received an additional boost from the high prices asked by state-controlled oil company Pertamina, which was asking for $350/t on a fob Cilacap basis. Pertamina was unperturbed by buyers threatening to switch to the cheaper international spot market for imports, stating that it was quite happy not to sell significant asphalt volumes and concentrate on the more lucrative marine fuel oil (MFO) market instead. The state-run firm’s interest in MFO could be one reason why Pertamina is believed to be keen to import asphalt cargoes over the November-January period, although a maintenance shutdown at the Cilacap refinery has also been suggested as the real reason by some industry participants.
The Indonesian construction sector could get a boost from the World Bank. Last month, the International Finance Corporation (IFC), the investment arm of the World Bank, said it will invest for the first time in Indonesia's roads, airports and power plants, taking advantage of a government program to improve infrastructure. Indonesia wants to attract $150bn of investment in roads, ports and other public work projects by 2009 but has yet to find investors.
Japan
Industry sources reported the sale of an October lifting cargo at around $260/t on a fob Japan basis. Fortunately for sellers faced with an oversupplied Chinese market, spot availability was limited by maintenance shutdowns at some refineries. The domestic market demand is also moving up as it heads into the construction period, which typically peaks in December.
Taiwan
Offers moved down to between $260 and $270/t but buyers continued to insist that $250-260/t on a fob basis was a more realistic figure. Taiwanese prices were hurt as Chinese buyers unable to accept cargoes because of high inventory levels turned sellers in the spot market instead. Speculation was rife that Chinese buying would be lower than expected for the next six months, with some industry sources taking Chinese buyers’ reluctance to discuss winter stockpiles this year as an ominous sign. Chinese demand is slowing as the country moves into winter, but a spate of typhoons and bad weather conditions are believed to have affected demand this year.
South Korea
Buyers of South Korean cargoes continued to push the seller to revise prices given the difficulty placing cargoes into the Chinese market. A cargo was believed to have been placed into south China for as low as $295/t on a fob basis, undercutting other sellers into that market.
India
Demand picked up as the monsoon season came to an end but buying interest was patchy with some areas still wet. Imports were ruled out for the present both because of the cost as well as the difficulty in obtaining supply from Iran.
Send comments to feedback@argusonline.com
ntjc
