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Singapore bitumen prices eased after high-sulphur fuel oil prices fell back from their record levels the previous week. But prompt supplies remain elusive except for those committed on term arrangements. Spot availability of bulk asphalt is expected to improve from the second half of May due to maintenance work on a vacuum distillation unit. Already traders have factored in the dampening effect of additional supplies on prices for deliveries in the second half of May to around $275-295/t fob. Asphalt prices were eroded by a spot prompt sale by Malaysia's state-owned Petronas of a cargo at the $270-290/t level to a trader for possibly Vietnam or Indonesia.
Singapore HSFO prices were under pressure this week as crude futures sank from record prices on improving supplies. HSFO prices fell by about $7/t from last week amid an oversupplied market on sluggish demand as Chinese buyers shut down for their national holidays in early May. Steep prices are stifling demand for high-sulphur fuel oil, just as long-haul arbitrage shipments to Asia-Pacific increase. Singapore stocks have ballooned to a six-week high because of this slower regional buying interest. Chinese buyers are looking beyond the region to replenish supplies. Indian refiners are also raising exports, attracted by high international prices.
Malaysia
The Malaysian market was described as strong with domestic supply remaining stable. Petronas was said to have lots of products stored in tanks. The Singapore ex-refinery price was said to be around $320. A daily buyer of trucked asphalt from Singapore said the price was around 1,244 ringgit/t ($343/t) on a delivered basis. But the buyer believed that next week, with competition to sell among the dealers growing, the price might drop.
Demand in Malaysia is being partly driven by the continuation of projects that were delayed due to bad weather in the last paving season.
Although demand has not changed, sellers report a weakening from the price levels seen last week based on the offers people are making. Buyers are offering below $280 Melaka fob. One seller said he was taking a wait-and-see approach, although he knew there was a danger that the price might continue to fall.
Petronas will sell some of its new Pen 60/70 in May and would like to get $300, but acknowledges it might have to accept a level between $270-280/t. It said this will not affect normal production.
China
A wide range of prices are being seen this week, with cfr offers into China varying from $340 to as high as $370. One trader confirmed that he had heard of deals done at the top of this range. Differences in price are largely due to shipping fees. Domestic prices shot up, especially in east China, as paving season demand starts to grow. China is on holiday until 7 May.
A buyer in Guangdong claimed to have cancelled a Bahrain cargo because no agreement could be reached on the manner of payment between the parties. The Chinese said they wanted to pay with a long-term letter of credit that the seller would not accept. The view from China was that the problem was irresolvable and so they have backed away from any deals.
The Chinese buyer claimed that a ship had been heading for Bahrain, but will now go to Thailand to load a cargo as part of a long-term contract signed recently. The price for the Thai cargoes was said to be at $300 fob.
Strong buying interest was expressed for South Korean and Taiwanese cargoes, but at the right price. A buyer thought $300 Taiwan fob and $280-295 South Korea was reasonable.
The domestic market was hit by the spike in the crude price and growing demand, with increases of 50-300 yuan/t ($6-37/t) seen across the country. In Guangdong the price is around Yn3,500/t for Pen 60/70 and Yn50-80 cheaper for lower quality products. In east China, the price is around Yn3,900/t. It is hard to tell if this is effecting buying. Storage tanks are generally full, so they do not have to buy.
Posted prices at Sinopec's Luoyang refinery in Henan were the same as last week, with Pen 90 and 100 at Yn3,440 and 3,360/t respectively. But at CNOOC's Binzhou refinery in Shandong, prices soared by Yn300/t to Yn4,150/t for AH-70 and AH-90 grade asphalt on the back of robust demand and a lower stockpile. CNOOC's Taizhou refinery in Jiangsu also raised prices by Yn350/t to Yn4,150/t for AH-70 and AH-90. Further north at the Jinzhou asphalt factory in Liaoning, offers were made at Yn3,900/t, up by Yn200 from last week, for Pen 70 and 90.
This week, the deal for the acquisition of Koch Materials China by Shell was finalised. The deal will more than double Shell's bitumen business in China.
Taiwan
A CPC tender was posted on 28 April, although details were unclear at the time of writing. But it was expected by market participants that the price would be above $320. Simosa claimed to have no spot availability for May even while buying interest remained strong from Chinese traders. But one Chinese trader said he was not interested in prices above $300
Japan
One or two cargoes of 3,000 tons will be lifted by the Chinese next week according to one of the big Japanese suppliers. Japan is on holiday until 7 May.
Thailand
A regular buyer of Thai asphalt said a major refinery in the country will cut production by a third during May. This will cause some shortages as production will drop from 45,000 to 30,000 t/month. It was also heard that a government-owned refinery will be taken over by Thai Oil this month.
Thai Petrochemical said all its products for May and June are sold on contract and so it will have no spot availability during this period unless there are cancellations or production is boosted. It was felt that the price had climbed to $320 fob.
Indonesia
A trader in Indonesia who deals mainly in domestic products says that Pertamina will be able to fulfil all its requirements this year. Demand will pick up in July, but at the moment it is the low season and so there is no need for imports. Government budgets are issued in January and so the country is still at the tendering stage. Prices in Indonesia were said to be around $280/t for bulk and $400/t for drums.
India
Production in India is running smoothly with no problems reported at refineries. Although the normal seasonal peak has passed, demand has apparently picked up a little. Other players in the market confirm that demand is strong, but the market is quiet because of high prices compared with last year. Iranian imports are not being bought at the same rate, so projects are being held up and suffering because of the high prices. Prices are expected to go up by $10/t in the domestic market on 1 May.
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