Malaysia's bitumen sector remains in a state of uncertainty after the government extended its conditional movement control order (MCO) until 9 June, just as market activity in the country was starting to pick up.
The extension of the conditional MCO, which was due to expire on 12 May, comes as construction firms prepare to resume business after a standstill of close to six weeks in the construction sector. Most construction firms had applied for approvals to resume work from 12 May, after the Malaysian government allowed nearly all sectors of its economy to reopen last week. Construction companies are now unsure as to when they will be able to officially resume operations.
The conditional MCO is like a partial lockdown that allows only essential businesses, including road maintenance work, to restart, according to domestic bitumen traders.
But bitumen suppliers have reported no sales since resuming business last week. A major supplier of bitumen for road projects, based in north Malaysia, is in no rush to lock in sales now while waiting for a clearer demand outlook.
The Ramadan season has also contributed to a lull in road works in the country, which is continuing to limit bitumen consumption, as construction staff typically work shorter hours during the Islamic fasting month. Market participants expect bitumen demand to pick up after the Ramadan period, which ends on 23 May.
Tank truck buyers, which previously held back from negotiations, have started purchasing small volumes of bitumen for immediate requirements. A tank truck deal for around 25-30t of bitumen was likely concluded at 1,100 ringgit/t ($254/t) on a delivered basis this week.
State-owned refiner Petronas has revised domestic prices to 1,150-1,250 ringgit/t ex-Malacca in the week beginning 11 May in response to slower bitumen sales, from around 1,200 ringgit/t ex-Malacca in the week to 1 May.
