Chinese bitumen producers cut price on weakening demand

30 May 2012 09:02  [Source: ICIS news]

SINGAPORE (ICIS)--China’s bitumen producers have begun a new wave of price cuts because of sluggish demand in the road paving and coking feedstock blending markets, traders said on Wednesday.

Deal prices for east China heavy-duty paving bitumen were yuan (CNY) 4,850–4,950/tonne ($764–780/tonne) on 30 May, a drop of CNY25/tonne from 25 May, according to ICIS C1, an ICIS service in China.

Meanwhile, Shandong’s bitumen deal prices were CNY4,800–5,000/tonne on 30 May, a fall of CNY125/tonne week on week, ICIS C1 data showed.

Road projects in central China, Shaanxi, Henan and Shandong provinces have weak bitumen demand because of tight project funding and pessimistic bitumen price outlook. The upcoming rainy season in central and east China will further affect demand, industry sources commented.

Bitumen demand for blending coking feedstock is also weaker. About 5% of northeast China’s bitumen was supplied to the coking feedstock and bunker fuel blending markets in May compared with 40% in the first quarter of the year, ICIS C1 data showed.

The lack of coking-use demand has caused refiners to supply more bitumen to the road paving market instead. This has consequently caused an oversupply in the paving market, traders commented.

The oversupply may intensify in June if there are no production cuts, market sources predicted.

$1=CNY 6.35

By: Jessie Yang

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