Prices in
But record high prices for high-sulphur fuel oil
largely took their cue from futures markets, as ample supplies and sluggish
demand continued to weaken underlying fundamentals. End-users in
Prices moved up on the supply limitations from north Asian suppliers such as
Chinese refiners have also reduced run rates, adding
to supply tightness in the domestic market.
Sinopec
is already asking for less crude in the next few months, according to Chinese
trading companies. Throughputs at Sinopec’s 360,000
b/d Maoming refinery — the largest in
While demand was being blunted by heavy rainfall in
the south of china and a drought in the central and northern parts in July,
traders expected that spot interest for cargoes would be stronger for August
and September delivery asphalt cargoes. In the meantime, the inclement weather
and
South Korean refiner SK continued to struggle to meet commitments as it was
supplying asphalt which it had contracted at low term prices even as it was
being pushed to produce more fuel oil because of better margins. Industry
sources said the refiner appeared to be producing additional short residue
which was currently priced at a lesser discount to fuel oil than was asphalt.
The short residue was being exported to
Prices went up as suppliers passed on higher costs, despite only dismal demand
as construction projects were few and far between. Contractors continued to
wait for infrastructure projects to be announced by the government but grew
increasingly pessimistic. In a reversal, prices of cargoes delivered by
Singapore suppliers were 10 Malaysian ringgit/t lower
than cargoes offered by Malaysian supplier Petronas
at 700 Malaysian ringgit/t. Singapore prices were
expected to move up to be at par if not higher than Malaysian prices within the
week.
A water crisis continued to affect asphalt production
as refiners were forced to scale back refinery operations because of a lack of
water. One supplier said that its production was down 40pc this month, and it
was only meeting term commitments. There was no possibility of any spot
availability in July, said the refiner which typically is a regular spot cargo
supplier. Another Thai refiner was also believed to have been forced to cut
production significantly as a result of the drought.
Some industry sources cautioned that asphalt availability could be further reduced as refiners switched to maximising fuel oil instead of asphalt. This was because domestic power generation companies were being encouraged to burn fuel oil over other feedstock.
Prices moved up as
Traders who typically import cargoes into
Taiwan commentary
Little spot availability was reported from Taiwan’s two refiners. CPC said that
it was struggling to meet term requirements and was hoping to persuade its
refineries to increase production of asphalt by 10pc to allow it to cope better
with demand. It was unlikely however that the refinery will concede, given the
relatively poor margins on asphalt as compared to fuel oil. Some industry
sources said that the lack of availability was forcing ships to wait longer
than usual to load cargoes, throwing an already tightly supplied freight market
working on short turnaround time off-kilter.
Simosa
said that it could have one cargo of around 4,000t available for July lifting.
But the refiner was otherwise sold out. The refiner has sold around 50pc of its
output on term this year and 50pc on spot. But the high proportion of spot
availability is working to its advantage given the higher spot prices as compared
with term. The quality of Simosa’s asphalt, usually a
sticking point for Chinese consumers, appeared to matter not as much in the
current tightly supplied spot market. But Simosa was
also believed to be targeting countries like
Official statistics from
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