S Korean bitumen spot prices fall below Chinese domestic prices

28 June 2012 10:06  [Source: ICIS news]

SINGAPORE (ICIS)--Falling prices of spot South Korean bitumen in China has made it more cost-effective to import July-delivery cargoes from that country than buying China’s domestic material, a trend last seen in September 2011, traders said on Thursday.

South Korean bitumen is usually traded at a premium to Chinese cargoes because of its better quality.

July CFR (cost & freight) China prices of South Korean spot bitumen, which are linked to FOB (free on boar) Singapore prices of 180cst fuel oil, dropped to $590-595/tonne (€472-476/tonne) as the latter fell to $580/tonne on 27 June, traders said.

The after-tax import costs were at yuan (CNY) 4,700/tonne ($739/tonne), lower than the average trading price of CNY4,800/tonne for domestic bitumen in Yangtze Delta, according to traders.

The after-tax import costs of July contract cargoes from South Korea also fell to CNY4,650/tonne, they added.

Some buyers may turn to imported bitumen if domestic bitumen prices do not fall, some importers said.

Approximately 100,000 tonnes of South Korean bitumen are expected to enter China through Yangtze Delta and Shandong. The share of imported bitumen in total supply from the two regions will be higher than usual, according to C1 Energy, an ICIS service in China. The total domestic bitumen supply from the two regions are estimated at 520,000 tonnes, according to C1 Energy.

Additionally, demand from east China’s road construction projects will be hampered by rainy weather in July. This may put downward pressure on domestic bitumen prices as well, the importers said.

($1 = €0.80)
($1 = CNY6.36)

By: Alfa Li
020-3762 0271

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