The Polish and Czech bitumen markets will remain well-supplied despite anticipated cuts in output caused by Saudi crude supply restrictions, according to market participants.
Bitumen supply could be curbed from as early as mid-October, market participants said.
But demand is unseasonably low, as it is in much of continental Europe because of funding limitations, and this will probably lead to continued bitumen price weakness against crude and high-sulphur fuel oil (HSFO) in the peak autumn season.
In mid-September, state-controlled Saudi Aramco cancelled or deferred term crude supplies to some European refiners that were scheduled to load in late September, according to market participants. This is likely to dent bitumen output in Poland and in the Czech Republic. Orlen operates the 373,000 b/d Plock and 108,000 b/d Litvinov refineries in those countries, and sources more than 40pc of its crude from Aramco.
The delays are linked to a prolonged outage on Saudi Arabia's 7mn b/d East-West crude pipeline, which was shut after it was attacked on 10 September. It has now restarted at 5mn b/d, a source said, allowing for crude exports to resume from the Red Sea port of Yanbu.
Bitumen demand was slow in September in Poland and the Czech Republic, and output rose. The Plock refinery recently underwent planned maintenance on its hydrocracker unit, which effectively increased availability of vacuum residue and lifted bitumen output. Polish buyers in September built stocks for October paving demand.
In the Czech Republic, the Litvinov refinery implemented a brief export curb to help meet domestic demand, and bitumen output at the refinery has been increasing steadily since mid-August.
Orlen has the option to import from its 190,000 b/d Mazeikiai refinery in Lithuanian if output remains restricted. Lithuanian supply briefly alleviated Polish supply tightness in June and July. Mazeikiai increased bitumen output significantly in the past few months, with monthly sales surpassing 75,000t in July, August and September.
Argus assessed Polish and Czech domestic truck prices at €572.50/t and €555/t, respectively, on an ex-works basis. These are five-month lows.
