Singapore/b>
Singapore
Asphalt prices in Singapore have not dropped like they did last week, but a lack of vessels and speculation that SK might dump a large quantity of product on the market could bring the price down further. The price is still around $285-300/t although to some market participants this seems fragile. Others expect the price to stick to this range in the short-term.
Weakness in crude futures pulled down high-sulphur fuel oil (HSFO) prices. In Singapore trade, market focus turned to 380cst HSFO, with two cargoes changing hands at $325/t and $327/t for loading on 16-20 June and 17-21 June respectively. A sharp fall in Singapore stocks failed to stem the bearish outlook for HSFO as demand continues to remain weak. Fuel oil stocks fell below 10mn bl for the first time in six months, but incoming long-haul arbitrage shipments over the next few days are expected to fill storage tanks quickly. Chinese demand remains subdued amid ample supplies, with May imports estimated at around 1.4mn t. Demand in June is expected to fall below 1mn t, despite warmer weather and higher consumption of electricity. Regional bunker prices in Singapore and South Korea lost ground. Tight berth congestion in Singapore capped sharper declines.
Malaysia
Petronas was said to be offering around 1,100 ringgit/t ($303/t) to domestic buyers. Demand in Malaysia is colling, but if it suddenly increases then there will be shortages. Traders who have arrangements with truck drivers are still selling even though the price is falling, as they need to keep the trucks occupied.
A prediction was made that the lack of shipping in the region to transport bulk cargoes will cause prices to soften until ship owners outside the region believe a profit can be made and move their ships into Asia-Pacific. The margin between the fob price at suppliers' ports and the delivered price in China must increase to allow for a profit to be made after freight is factored in. A supplier in Malaysia believes that the fob price for bulk in Singapore and Malacca could fall to $260/t before this happens. He believes this could begin in the second half of June and the market will therefore stabilise. Demand is too strong in China for the price to decrease there, although as the paving season hits its peak this could also increase the margin. The price at Malacca is just below $280/t.
Indonesia
A trader refuted expectations that cargoes might arrive from Singapore, as there is little demand. There are some sales, but they are small projects that are not dependent on government financing. The paving season will start in late June or early July. Apparently traders have full tanks, so there is unlikely to be any need for additional supply. But there could be some unforeseen demand due to the earthquake that struck the island of Java last week.
Taiwan
Simosa said it is offering at above $320/t fob, although there were no spot cargoes available for June. It is also believed that CPC will have no spot availability for June. But this will change by July as exporters seek to exploit increased demand as the paving season starts to peak in July in China. Interest from China remains robust, according to Simosa, although vessel availability continues to hamper the smooth flow of the market. But there was an expectation that some new vessels would be available in June, although no details were given.
China
Domestic storage tanks are still full in China, and there seems to be more willingness to sell with the price having levelled out over the last few weeks at above 4,000 yuan/t ($499/t) at many refineries. Demand has been affected by bad weather in the south and, to a lesser extent, the east. This has created opportunities for southern sellers to target buyers in the north, where the rain has not been so disruptive. But the general lack of demand as projects have stalled, mainly because of the weather, has caused what might be the start of a downward trend in price in the south. This week, there have been quotes of below $370 cfr east China, although generally there has been no change.
Traders received a boost recently when the government announced its plan to build 28 new airports and upgrade 27. Shell Road Solutions, which recently acquired Koch Materials China, is said to be keen to be involved in these projects and feels well placed with its recent experience with Bangkok and Dubai international airports and its specialist fire-retardant product.
A trader in south China is negotiating to secure volumes from Thailand to supply half of the requirement for the new Zhuhai-Jiangmen expressway that will commence construction in September. The project demands 21,000t and the road is 56km. Another recently announced project is a new Tibet-Nepal highway. But, according to sources, contracts to supply this project will be awarded only to those with close relations with construction companies. The military is often involved in large projects in Tibet.
In Guangdong — which has seen a lot of rain — Gaofu refinery in Foshan offered at Yn3,900/t, although term contracts were completed at around Yn3,500/t. At Wenzhou refinery in Zhejiang, offers were at Yn3,900/t while term contracts were signed at Yn3,750/t. Dongming in Shandong offered at Yn3,800/t, but was rumoured to have sold for about Yn3,600/t. Binzhou refinery in Shandong continued to hold its offer at Yn4,150/t.
India
Prices increased across India by an average of $17/t. The monsoon has arrived one week early and is now covering all of India south of Mumbai. Demand will fall until the end of June, when the monsoon will cover the entire country putting an end to the paving season. But there is some comfort for producers in the guise of the stabilising political situation in Nepal. Construction projects that have been on hold are being encouraged by the government to start up again, creating additional demand. This could also provide a market for Iranian drums.
An Indian trader who is looking to export to China says he is negotiating to move 10,000t, divided between bulk and drum cargoes. At the moment, he is indicating prices of $375/t cfr east China for drum, and $340/t for drums. The plan for shipping includes transshipment at Singapore or Hong Kong.
There are rumours that Bahrain will increase its price in response to Iran's April price rise of $22/t. Buyers of Iranian bitumen in India complain that they have been told there will be nothing available for the next two or three weeks due to increased orders and transport problems.
Send comments to mailto:feedback@argusmediagroup.com
ntml
