China’s bitumen prices to decline in November on weak demand

06 November 2012 09:46  [Source: ICIS news]

SINGAPORE (ICIS)--China’s bitumen prices are expected to continue declining in November as demand from road construction projects will likely weaken with the start of winter, industry sources said on Tuesday.

The suspension of road construction projects will increase bitumen supply to the coking feedstock and bunker fuel oil blending markets in November, sources said.

However, the current soft prices of coking feedstock will weigh on bitumen prices, the industry sources added. Prices for coking feedstock softened as a result of weak demand from the downstream soft distillates market.

Bitumen, also known as asphalt, is used in road construction and paving as well as in the water proofing of homes and industrial buildings. The paving of roads can be done only in warmer seasons such as summer and autumn.

The AH-70/90 bitumen was traded at CNY4,800-4,900/tonne ($768-784/tonne) in north China on 5 November, a decline of CNY70/tonne from late October, ICIS data showed.

The prices of AH-70/90 dropped by CNY100/tonne to CNY4,850-4,950/tonne in east China and fell by CNY25/tonne to CNY4,850-4,900/tonne in south China in the same period, according to ICIS data.

Prices declined in late October in north China, especially in the northeast region, because most road construction projects were completed.

Bitumen prices have softened in the Chinese domestic market since mid-October as a result of price cuts in east China, where demand for bitumen remains weak.

On average, prices of AH-70/90 bitumen decreased by CNY40-100/tonne across China in October, ICIS data showed.

However, domestic bitumen producers maintained their high output throughout October because of high margins from softer crude prices.

($1 = CNY6.25)

By: Jessie Yang

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