Asphalt: Asia-Pacific market commentary

: Oil products
07/05/14

Singapore

Singapore
Prices have stayed firm this week, strengthening slightly due to the limited volumes of spot cargo still available for the second half of May and bullish price expectations for June.

Offers for June are only expected to be made in the next two weeks when producers have a better idea of the supply situation.

One small cargo for late-May delivery was heard in the region of $280/t but most market participants are still more conservative, pegging their price ideas at about $265-275/t fob.

Malaysia
Prices remain firm in Malaysia, giving some relief to the market after they rose by over $10/t fob in the second half of April. Demand is mixed across the country as heavy rains in some parts are preventing building and road paving projects from going into full swing.

Truck-delivered prices from Singapore to Malaysia remain at about $277/t but one producer in Singapore was said to have sold at about $280/t.

Buyers in Malaysia have been hoping for prices to soften after Kemaman Bitumen starts deliveries. But there has been no recent news on whether the plant is on track for its scheduled June-July opening.

Indonesia
Demand has been weak in the country as asphalt in storage tanks is still at strong levels during the current low season for construction and road paving. This situation is likely to continue for the rest of May, with imports from Singapore likely to drop. But demand is expected to pick up in June when work starts on new building projects in the country, say market participants.

Domestic prices remain unchanged at $308/t for May, with a slight reduction in the dealers’ discounts.

Thailand
Rainy weather in the country has dampened domestic demand in the last two weeks, with one producer even anticipating greater spot availability for June export due to a surplus in the local market.

Two producers are said to be offering about $270/t fob for one small cargo each to be delivered in the second half of May.

Some buyers have started negotiations for June deliveries and price expectations are at $265-270/t, up from $260-265/t in May.

Japan
The market continues to be quiet going into May as both production and demand are typically low in the second quarter. Building projects have slowed down at the start of the fiscal year and most refineries will be shut down for maintenance.

One producer is said to have 3,000-4,000t available for May and is believed to be making offers at around $320/t cfr to east China.

Asphalt production in Japan for February increased slightly to 481,028t from 467,878t in January. Exports for February were relatively stable at 12,750t, compared to 12,718t the month before.

South Korea
Domestic demand is expected to be strong going into June as more building and road paving projects start with temperatures rising in the country. SK and S-Oil are both not expected to have significant volumes of spot cargo available. The high domestic price, in the region of $315/t on a delivered basis, has encouraged producers to sell their stock to local buyers.

S-Oil is scheduled to have a maintenance shutdown at its Onsan refinery in June. The reduced production will likely see the producer concentrate on the domestic market.

China
Prices on the Chinese market have remained relatively steady after the week-long holiday. Most domestic refineries pushed up asphalt prices by Yn50-100/t ($6.50-13.00/t) early in the week. Offers were made at around Yn3,050-3,200/t in east China, Yn3,100-3,200/t in south China and Yn2,800-3,000/t in northwest China. Fuel oil prices hovering in the high end have also seen production volumes at refineries drop in recent weeks. But supply and demand remains balanced as large-scale construction projects have yet to come into full swing. China cfr prices are up slightly to $310-320/t, a rise of $2.50/t from before the holiday. The freight rate is unchanged compared with the week before the holiday.

China imported 354,200t of asphalt in March this year, boosting the total import to 874,900t in the first quarter, up by 10.2pc from the same period last year. Domestic production was heard to be over 900,000t in March, boosting output to around 2.4mn t in the first quarter.

In east China, at least three refineries pushed up prices this week. Sinopec Shanghai and Zhenhai were both up by Yn50/t, respectively, to Yn3,080/t and Yn3,180/t, and nearby CNOOC Daxie also raised prices by Yn50/t to Yn3,100/t. In Shandong province, CNOOC Asphalt raised its offer price by Yn180/t to Yn3,150/t, amid slightly stronger demand in the province. Demand in other provinces of the region is stable, with little change from before the holiday.

In south China, two Sinopec refineries raised prices this week. Sinopec Guangzhou and Maoming both increased prices by Yn100/t to Yn3,100/t and Yn3,200/t, respectively. In Guangxi province, a new tender emerged this week seeking 88,800t of asphalt for highway building, 26.9pc for modified grade and the rest for AH-70 grade. The tanker Liang Zhou arrived at Sanya in Hainan province this week, shipping 3,000-4,000t of asphalt from Singapore or Thailand.

Three refineries in northeast China increased their prices this week. Petrochina Qinhuangdao and Panjin Northern both pushed up their prices by Yn100/t to Yn3,100/t, and nearby Petrochina Liaohe was also up by Yn100/t to Yn3,150/t. The cargoes from the refineries are still mainly sold to contract buyers.

Demand is stable in northwest China, and three refineries raised their prices this week. Petrochina Karamay was up by Yn50/t to Yn3,200/t for customers within Xinjiang, and to Yn3,000/t for those outside the province. Sinopec Tahe also went up by Yn50/t to Yn2,800/t. Sinopec Xi’an was up by Yn50/t to Yn2,940/t. In Ningxia province, one new tender appeared looking for 32,000t of modified grade asphalt.

CNOOC Sichuan in southwest China was up by Yn80/t to Yn3,400-3,500/t this week. And Sinopec Luoyang in central China was up by Yn50/t to Yn3,020/t.

Taiwan
Fob prices are slightly up this week, boosted by strong prices in the region. Formosa is likely to start selling 10,000t of June cargo from next week.

India
Prices remain unchanged for this week as the country goes into the tail-end of its peak construction season. The arrival of rainy weather in June will typically see domestic demand slow down.

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