China bitumen futures steady ahead of lunar new year

Bitumen prices on the Shanghai Futures Exchange (SHFE) were steady today despite a dip in crude futures.

The March-delivery bitumen futures contract closed at 2,614 yuan/t today, down by Yn44/t or 1.7pc from the previous trading session but flat week-on-week. Trading volumes exceeded 200,000 contracts, with each contract consisting of 10t.

The next most heavily traded June contract, due for physical delivery on 15 June, edged down by Yn44/t or 1.6pc from the previous session's close to Yn2,682/t. The contract prices was largely unchanged from Yn2,694/t a week earlier. Trading was heavy with volumes above 600,000 contracts.

Bitumen buying has slowed ahead of the lunar new year holidays in mid-February. Construction work on major expressways typically comes to a complete halt 10-15 days ahead of the holidays. Stockpiling was also curtailed by fluctuations in crude prices, rendering prices "still unworkable" for storage, one market participant said.

The demand outlook remains uncertain following the holidays, slowing negotiations for spot cargoes. The dip in market sentiment marks a change from earlier optimism ahead of the 14th five-year plan that take effect this year.

The government has issued increasingly strict warnings against inter-provincial travel during the holidays in a bid to curtail the spread of Covid-19.

Chinese physical cargo prices were unchanged from the previous week at around Yn2,800/t, with prices in the south at Yn2,950-3,150/t on an ex-refinery basis.

By Liz Ng