Bahrain bitumen cargoes head for Asia on open arbitrage

Singapore's bitumen prices have surged by nearly 90pc in the past three months to $322.50/t fob for the week ending 3 July, making it the most expensive region globally and opening an arbitrage with Bahrain for first time since the end of January.

Asian refiners have lowered run rates in order to manage middle distillate supplies and this has impacted bitumen production. This, coupled with higher regional road construction activities, bolstered prices. Singapore's bitumen exports for the first half of 2020 stood at 1.32mn t, unchanged from a year earlier. But demand across China, Vietnam, Thailand and Malaysia has remained firm, with Thailand's domestic prices rising to a 6½-year high.

About five bitumen cargoes carrying a total of 40,000-50,000t are headed to Asia over the next two to four weeks from Mideast Gulf, to meet demand. The 19,336t Bluebird Arrow loaded around 7,000t from Bapco and is expected to discharge in Tanjung Langsat in the week of 13 July, according to vessel tracker Vortexa. The 19,308t Kingbird Arrow is loading bitumen at Sitra port while two other vessels, the 6,186t Da Kun Shan and the 7,500t Kang Hua Shan, are on their way to Sitra to load cargoes. Cargoes from Bahrain will discharge in Malaysia, a key demand centre. An 8,000t cargo has also loaded from the UAE and is heading to Asia.

Bahrain's export prices have remained competitive with Singapore, with Bahrain's prices $92.50/t lower than Singapore's. Freight for a 5,000t vessel is typically at around $90-100/t, according to industry participants. Bahrain's cargoes have been regularly heading to Asia since the end of 2018 when the arbitrage with Asia first opened.

By Aabha Gandhi