FocusAsian bitumen prices down on softer fuel oil prices

11 May 2012 06:37  [Source: ICIS news]

By Andrea Heng

SINGAPORE (ICIS)--Asia’s bitumen prices for June cargoes have fallen in tandem with the decline in fuel oil markets amid softer crude futures this week, but Iranian offers rose on a stronger rial, market sources said on Friday.

Bitumen offers from Singapore softened to around $650-660/tonne (€501-508/tonne) on 10 May amid the fall in fuel oil prices and weak demand, after they were heard at $660-670/tonne FOB on 8 May.

Fuel oil prices fell sharply during the week ended 10 May to $680-684/tonne, a drop of $50-53 from the previous week, according to ICIS.

Crude futures on the morning of 11 May hit their lowest level in the week to at $95.93/bbl, a drop of more than $1/bbl from the previous session.

WTI crude futures had started the week on 7 May, down by $3/bbl from the previous session amid renewed eurozone worries, a stronger US dollar and lingering concerns over US jobs.

Across the region, bitumen prices dropped, tracking the downtrend of the FOB Singapore range.

Taiwanese cargoes were sold this week at $640/tonne FOB, down by $10/tonne from the prices in the previous week.

The country’s supply is expected to decrease for June, but demand from major importing region southeast Asia will be weak.

The government in Indonesia which is on track to commence their road building projects in June has bought their purchases earlier in the year and will not be purchasing in June, while Vietnam has entered its traditional lull demand period ahead of the monsoon season in August-September.

In South Korea, producers are expected to announce their offers for June in late May and some traders forecast the prices to drop further or to below those of cargoes of Taiwan and Singapore origins.

Buyers’ interest in bitumen at the current levels remains weak, with indications heard at the low $600s/tonne FOB Singapore.

“A refiner offered bitumen at $660/tonne FOB Singapore, but we expected a lower price because fuel oil prices have fallen. China buyers are only able to accept $640-645/tonne FOB Singapore at the most,” an international trader said.

Despite the overall decline in Asia, offers of Iranian product firmed in line with the appreciation of the rial against the US dollar this week.

Drummed bitumen of Iranian origin to southeast Asia was offered at $600-625/tonne FOB Iran, but buying ideas at $530-550/tonne widened the buy-sell gap as customers await a clearer picture of the currency performance.

“Selling ideas are stronger mainly because the rial has appreciated against the US dollar this week, but buyers remain hesitant to commit because they are uncertain if the rial will maintain its strength against the greenback,” a Dubai-based trader said.

($1 = €0.77)

By: Andrea Heng
+65 6780 4359

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