Government funding boosts Thai bitumen demand

Thailand's road construction activity has picked up after the government released funding and the country lifted a nationwide Covid-19 lockdown earlier this month.

Thai domestic prices for May have risen to $320-350/t ex-refinery, up by a sharp $80-100/t from April, in line with strong demand and limited supply. Domestic prices in April had fallen to the lowest level since the end of 2016 as demand was hit by the coronavirus outbreak.

Activity has been boosted as the government disbursed its roadworks budget, which had been delayed since October 2019 because of elections and spending restraint. The easing of Covid-19 lockdown measures from 3 May has also spurred construction activity, resulting in an increase in domestic bitumen demand.

Bitumen supply looks likely to remain tight for June as Thai refineries cut run rates because of weak distillate margins. Negotiations for imports are continuing amid the limited availability from domestic refiners, but deals are yet to be concluded. Road contractors are in a hurry to complete works before the monsoon season begins in July, and also to take advantage of lighter traffic with some movement restrictions still in place across the country.

By Regina Koh