Asian bitumen faces pressure from vessel delays

Vessel shortages and delays in the delivery of bitumen cargoes across Asia-Pacific are expected to soften short-term spot values in the key market of Singapore.

There have been loading delays from Singapore as vessel availability has progressively tightened during September.

"There are limited vessels in the region as there could be fewer new vessels," said a key Singapore-based trader and shipowner.

The building of new vessels could have slowed during the Covid-19 pandemic, while some of the older vessels have been scrapped, the trader added. The reduced replacement of new vessels has coupled with the impact of delays for returning ships from voyages to northeast Asia.

Buyers in regional markets like Indonesia are seeing delays in loading of cargoes from Singapore by around a week because of berth congestion and a lack of vessels.

"The pushback was mainly due to the delay in the end [of last] month's loading, [when it's] supposed to load on 1 September but [was] delayed to 8 September due to berth congestion and cargoes not being ready," said an Indonesia-based importer.

But the delays since early September have lingered in Singapore as vessel loading schedules are still tight. There are vessels delayed or stuck in northeast Asia because of bad weather or port-related issues, Singapore-based traders added.

Vessel delays are occurring in northeast Asia as well, especially on the key South Korea-east China route, on the back of the impact of Typhoon Muifa.

There are delays up to 8-10 days for vessels loading or unloading cargoes in east China, while overall availability of vessels is also tight, said a key east Chinese importer and shipowner.

There were also disruptions at some key ports in east China and South Korea in the past week that may have further added to delays, said regional market participants. Operations at ports like Ulsan in South Korea and Shanghai in east China were affected because of the typhoon and it has affected vessel schedules.

Softer prices

Prices may soften in the short term in Singapore on the back of additional supplies being available following delays in chartering or loading vessels from the port. Spot prices assessed by Argus on a fob Singapore basis slipped to $550/t on 21 September, the lowest since 5 August.

Offers have emerged from Singapore-based refiners this week at about $550-560/t fob for October-loading cargoes, with some expecting a further dip in the coming days if the current situation persists. Argus assessed spot values in South Korea at $510/t fob, down by $40/t from nearly a month ago.

Singapore-origin cargoes have been unusually resilient in recent months and fob values have far outstripped those in South Korea and especially in Iran. Prices have held firm in a high $550-600/t fob Singapore range since May this year, despite the steep volatility in Brent crude futures and heavy refined products. The spread between Singapore and South Korea fob was $40/t on 21 September, while the spread between Singapore and Iran prices was $250/t.

The impact of the vessel delays affected bitumen freight rates across the region, but shipowners are either still revisiting current rates or are handling a flurry of enquiries from regional participants.

By Mahua Chakravarty