FocusEast China bitumen supply to drop on shutdowns, weak demand

10 May 2012 05:59  [Source: ICIS news]

By Psyche Gong

SINGAPORE (ICIS)--Bitumen supply in east China will drop in May as refiners have shut their plants or are planning to carry out maintenance works in response to the prevailing weak demand, traders said on Thursday.

Bitumen supply in the region is expected to drop by 24% month on month to around 275,000 tonnes in May, according to C1 Energy, an ICIS service in China.

Sinopec has halted bitumen production at its 12m tonne/year bitumen plant in Ningbo at Zhejiang province since 25 April because of the weak demand and is expected to restart its plant in mid-May.

The refiner will produce 60,000-70,000 tonnes of bitumen in May, a 14% drop month on month, according to analysts’ forecasts.

China’s Golden Sea Zhenjiang Resources on 7 May shut its 700,000 tonne/year bitumen plant at Zhenjiang in Jiangsu province for a turnaround because of the unstable supply of feedstock crude.

Traders said Golden Sea has little incentive to produce bitumen because demand is weak.

Jiangsu CNPC Xingneng Asphalt shut its 6m tonne/year bitumen plant at Jiangyin city in Jiangsu province for maintenance on 5 May, while CNOOC will start a 15-day turnaround at its Taizhou refinery on 15 May, market sources said.

The demand in east and central China is weak as tightened credit in the country has limited the purchasing power of traders.

In addition, traders and road project owners are expecting prices to fall this month so many have adopted a wait-and-see stance, industry sources said.

However, some market players said the drop in supply may provide some support to prices.

“Prices are unlikely to fall greatly in May because both demand and supply are low,” said a trader.

Meanwhile, a portion of east China’s low-sulphur bitumen is being supplied to the local road paving market instead of Shandong’s coking feedstock blending market.

This is because the demand for bitumen as coking feedstock is weak, traders said.

However, the resultant extra supply was offset by the reduction in supply in east China and thus has not affected bitumen prices in that region.

Bitumen prices in east China were at yuan (CNY) 5,050/tonne ($800/tonne) on 8 May, stable week on week, ICIS data showed.

($1 = CNY6.31)

By: Psyche Gong
+65 6780 4359

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