China bitumen seen weak amid high inventories, weak demand

By Lisa Wang

SINGAPORE (ICIS)–Spot bitumen prices in Asia are expected to remain weak in the coming weeks as inventories are piling up amid sluggish demand, market sources said on Monday.

On 14 February, the benchmark prices of AH-70/90 bitumen were assessed at yuan (CNY) 4,200-4,250/tonne in east China, down by CNY50/tonne from late last month prices.

The prices in south China had also decreased to CNY4,250-4,320/tonne, down by CNY100/tonne from the values at the end of January, according to ICIS data.

As of last week, bitumen inventories in south China accounted for 45% of the region’s storage capacity of 155,000 tonnes.

In the eastern part of the country, inventory stood at 49% of the region’s total storage capacity of 473,000 tonnes.

The Chinese market was closed for a full week on 31 January to 6 February for the Lunar New Year celebration.

Upon return to the market, a number of bitumen producers cut their prices because of the strong build-up of inventories in the coastal regions.

Wenzhou PetroChina Petrochemical has cut its bitumen prices to CNY4,000/tonne for vessel delivery, with further discounts available for bulk deals, traders said.

PetroChina Gaofu Petroleum in south China reduced its prices for the material to CNY4,300/tonne from CNY4,350/tonne two weeks before. For bulk deals, its prices are lower at CNY4,250/tonne.

Also in south China, Sinopec Maoming Petrochemical lowered its prices for Grade A and Grade B AH-70/90 bitumen by CNY130/tonne over the same period to CNY4,320/tonne and CNY4,270/tonne, respectively.

In the east China market, which is generally more active, total bitumen stocks of three big producers – namely Sinopec Jinling Petrochemical, Alpha (Jiangyin) Bitumen and Jiangsu PetroChina Xingneng Asphalt – grew to 140,000 tonnes on 12 February from 97,000 tonnes on 29 January, industry sources said.

Bitumen is used in paving roads, as well as in waterproofing of buildings.

Demand is now almost zero given the winter season, with construction activities in road infrastructure only expected to pick up in late March or April, on account of warmer weather.

Buying interest from traders, meanwhile, has been soft as they anticipate further declines in prices, market sources said.

East China-based traders have been quoting buying ideas at yuan (CNY) 4,000/tonne, down by CNY225/tonne from current prices.

Stockpiling interest is currently limited, traders said.

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