Low interest in Iranian bitumen expected from China – traders

31 May 2012 09:40  [Source: ICIS news]

SINGAPORE (ICIS)--China’s appetite for Iranian bitumen will be limited in the short term because of the material’s quality and its associated financial risks, although China has begun importing bitumen from the Middle Eastern country again, traders said on Thursday.

The country imported 2,053 tonnes of bitumen from Iran in April, after a suspension of eight years, according to China Customs data.

Another 4,000 tonnes of Iranian cargoes are expected to reach China in May, according to C1 Energy, an ICIS service in China.

Jiangsu Baoli Asphalt, which purchased a small volume of Iranian bitumen in April, has given up on large purchase plans because of the material’s low quality, market sources said.

China’s national standard requires bitumen ductility to be above 99cm; Iranian material is below this,” an industry source said.

Some importers are selling drummed Iranian bitumen at yuan (CNY) 4,650/tonne ($732/tonne) ex-terminal, which is lower than China’s domestic bitumen prices at CNY5,100-5,300/tonne. This is partly because of its lower quality, according to market players.

Iranian bitumen has a high wax, water and impurities content, a Chinese importer said.

In addition, some Chinese banks are reluctant to provide letters of credit for imported goods from Iran because of the economic sanctions against Iran by the US and some European countries, traders said.

The appreciating Iranian rial is also causing price risk to buyers. The FOB (free on board) price of drummed Iran bitumen has increased from $550/tonne in mid-April to above $600/tonne in late May, C1 Energy data showed.

($1 = CNY 6.35)

By: Alfa Li
020-3762 0271

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