London, 21 July (Argus) —
Germany
German bitumen prices averaged €350-385/t ($555-610/t) fob refinery for 70/100 pen grade. But some sellers, yet to raise their prices, were selling below this range.
A further price rise of between €20-50/t ($32-79/t) depending on region and supplier was anticipated in August as German bitumen prices still lag rises in the price of crude oil.
On a regional basis, bitumen demand was the most active in the northwest and the south of the country and German consumption for the first six months of the year was said to be marginally up on 2007. But expectations for the year as a whole are for a 5pc increase in overall bitumen demand.
Italy
Italian domestic bitumen prices continued to strengthen, gaining some €40-60/t ($63-95/t) over the week to stand, depending on region and refinery location, at €430-460/t ($681-729/t) fob refinery including the €31/t ($49/t) government tax for 70/100 pen grade. This is the equivalent of €400-430/t ($634-681/t) fob refinery before tax. Prices in the north of the country were pegged at around €430-440/t ($681-697/t) fob refinery including tax.
One refiner in the region was reported to be selling earlier in the week at €410/t ($650/t) fob refinery with tax and encountered demand that far exceeded its availability. The refiner is understood to have since raised its prices.
Prices in the south were some €10-20/t ($16-32/t) higher than in the north at between €450-460/t ($713-729/t) fob refinery including tax, depending on volume and refinery location.
Bitumen demand for the first half year was understood to be around 10pc down on last year but so far this month there has been an upturn in volumes compared with June. Good demand was seen for Italian bitumen export especially into Algeria. But stable demand was also noted from Tunisia, Morocco, Lebanon and Cyprus. There were also at least one, possibly two enquiries for exports to west Africa. There were also potential requirements into Turkey in the coming months, traders says.
The spot export premium was reported to be $2-8/t above the published HSFO fob Mediterranean price quotation, depending on destination of the cargo. The premium for short cross-Med voyages was likely to be towards the top end of the range while longer voyages with significantly higher freight costs were likely to be near the lower end, sources says.
A $2-8/t premium equated to a fixed price of $642-648/t (€405-409/t) fob Italy based on a five-day average mean Argus HSFO fob Mediterranean price of $640/t.
UK
Bitumen prices currently average around £350/t (€441/t, $699/t) fob refinery. But actual market prices range broadly, from around £325/t (€410/t, $649/t) for high volume bitumen purchases to £400/t (€504, $798/t) for a single plant operator.
Bitumen producers have indicated a price increase of at least £50/t (€63/t. $100/t) from August and have warned of a second price rise shortly afterwards. This would bring the average bitumen price in August to at least £400/t (€504/t, $798/t) ex works and the market fully expects prices to reach £450/t (€567/t, $898/t) by the year-end.
Some suppliers have moved over to net pricing ending the system of central rebates and this softened some of the impact of this year's steep rise in bitumen prices.
But asphalt and road contractors say that market conditions are difficult especially for those who have fixed-term road contracts and who are unable to pass on price increases in bitumen and other inputs such as diesel and power costs. But even those companies with contracts tied to the RPIX retail price index which — at 4.8pc for June — fails to reflect the magnitude of the increased costs of asphalt inputs are also feeling the squeeze.
But suppliers say that bitumen costs have not kept up with the rise in oil prices and they warn that if this continues they may be forced to reduce bitumen production in favour of other, more economic products.
The outlook for the second half of this year is one of falling bitumen demand, sources say. This contrasts with broadly stable demand in the first six months of 2008 compared with a year ago.
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