Indonesian bitumen demand slips during Ramadan

The Islamic fasting period of Ramadan is cutting bitumen demand from the key consumption market of Indonesia, at a time when regional demand for the road-paving material is softer.

This could weigh on prices in the major export port of Singapore.

Ramadan started on 22 March and will end around 20 April. Consumption from Indonesia typically takes around 1-2 weeks to recover following the conclusion of the fasting season, during which activities including roadworks slow considerably. The impact of Ramadan on Singapore prices could be proportionally bigger than last year given the relative absence of demand from other key markets Vietnam and China in recent months to offset weaker Indonesian demand this time of the year.

The key Singapore ABX 1 prices rose from $532.50/t fob to $550/t over the corresponding Ramadan period in 2022 as suppliers focused on other markets, especially China, where a supply crunch was developing. The ABX 1 fell to $477.50/t on 24 March from month-earlier levels of $505/t fob, with some participants expecting the backwardation trend to persist on market expectations that a supply glut is looming in China.

Bitumen consumption across many parts of southeast Asia has already been relatively soft because of unseasonal weather conditions disrupting roadworks and a lack of fresh funds for roading infrastructure. Indonesia's bitumen consumption is expected to fall by at least 10pc during the Ramadan period from month-earlier levels, an Indonesia-based participant said. Higher-than-usual inventory levels could also dampen the country's appetite for seaborne material.

Indonesia is a net importer of the road-paving material, drawing most of its seaborne cargoes from Singapore because of compatible specifications and proximity. The country imported 925,963t of bitumen in 2022, of which 659,373t came from Singapore, according to GTT data.

By Sathya Narayanan