China bitumen price likely to plummet on declining demand

21 May 2012 09:15  [Source: ICIS news]

SINGAPORE (ICIS)--China’s bitumen price will see rapid fall because of the weakening demand across the country, industry sources said on Monday.

The widespread price cuts are expected to continue for the next couple of weeks before demand finally picks up, they said.

The average prices of heavy-duty paving bitumen are at yuan (CNY) 4,876-5,033/tonne ($772-796/tonne) on 18 May, a drop of CNY33/tonne or 0.66% from 16 May. This price level was last seen in mid-March, according to ICIS C1, an ICIS service in China.

 “Some refiners have begun adjusting down price, this may cause a chain reaction and the price could drop rapidly in the short term,” a south China-based trader said.

In particular, bitumen deal price from a south China refiner is CNY4,800/tonne on ex-refinery basis, while Yangtze Delta refiners are selling at CNY4,950/tonne on 18 May, both at CNY100/tonne lower from one week ago, traders said.

The oversupply situation is expected to remain in place for the near term and high inventories will force more players to slash prices, according to traders.

China’s bitumen demand has been declining since late April.

Traders stopped buying because they have built enough inventories while end-user demand from road projects has not entered the peak season yet, market sources said.

Demand from coking feedstock and bunker fuel oil blending market is also weakening because of the recent oil products price drop.

Some producers have cut output to support price.

The average run rate of domestic bitumen producers have fallen to 48.3% in the first half of May, the lowest level in three years.

However, thin demand means most producers are still experiencing mounting inventory pressure, traders said.

($1 = CNY 6.32)

By: Alfa Li
020-3762 0271

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