Singapore bitumen to extend downtrend; Asia in oversupply

14 June 2012 06:36  [Source: ICIS news]

By Alfa Li

SINGAPORE (ICIS)--Spot bitumen prices in the Singapore market may continue to fall because of a regional oversupply, as demand is soft in China and southeast Asia, traders said on Thursday.

Bitumen prices have fallen by almost $100/tonne from late April to $570-580/tonne (€456-464/tonne) FOB (free on board) Singapore on 13 June, according to C1 Energy, an ICIS service in China.

Sharp falls in crude and fuel oil prices have been dragging down bitumen prices in the Singapore market, along with stagnant demand.

Duri crude, which is a major pricing benchmark for heavy crudes, has declined by 16.5% from late April to mid-June, while the price of Singaporean 180CST fuel oil decreased by 17.4% over the same period, according to data from C1 Energy.

Demand for Singapore bitumen coming from its three main markets – China, Australia and southeast Asia – has been declining since May, market sources said. These markets account for 70% of Singapore’s total bitumen exports, according to C1 data.

China-based traders largely stopped purchases in late April as they already had enough inventories, while end-users’ demand from Australia declined sharply in May because of the onset of winter. In Southeast Asia, on the other hand, the rainy season has started, dampening demand for bitumen, which is used in paving roads.

Meanwhile, bitumen production in Singapore is expected to be stable in June and July - when the country aims to export 130,000-140,000 tonnes of the product monthly.

Singaporean producers would have to cut prices to attract buyers, traders said, citing that the city-state's bitumen may only turn attractive at $550/tonne FOB.

($1 = €0.80)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Alfa Li
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