News
06/01/25
Viewpoint: Asia bitumen supply to rise, demand mixed
Singapore, 6 January (Argus) — Increased bitumen exports from south China could
boost supplies in southeast Asia this year, but increased consumption is only
expected in a few key Asian economies in 2025. Pent-up demand from previously
incomplete projects in 2024 could bolster near-term buying interest. Projects in
key Vietnamese, Indonesian, and Chinese markets were delayed in 2024 because of
inclement weather and government funding issues, with some project cancellations
in Indonesia. Overall demand in Australia was also lacklustre because of limited
funding amid high inflationary pressure. This was exacerbated by higher import
costs in the third quarter of 2024 when demand outpaced supply. Strong
high-sulphur fuel oil (HSFO) prices and weaker export margins curbed bitumen
production in key exporting countries, including Singapore, South Korea and
Thailand since the second quarter. This is likely to change in 2025 with
production expected to return to more typical levels, sources close to southeast
and northeast Asian refiners told Argus . Higher export availability from south
China, especially from independent refiner Chambroad's 80,000 b/d refinery in
Hainan, could limit import demand for cargoes from other exporting regions,
market participants added. The Hainan refinery has plans to export around
400,000-500,000t in 2025. A 270,000 b/d refinery located in peninsular Malaysia,
which refrained from producing bitumen since mid-2024, is likely to resume
operations in 2025. The 175,000 b/d Map Ta Phut refinery in Thailand, which
prioritised fuel oil production in 2024, is also likely to increase bitumen
output this year, adding to the overall export supply pool. "If you compare
current HSFO and bitumen prices, they are at very similar levels. From a margins
perspective, the refiners have little reason to cut bitumen production," a
southeast Asian trader said. "[But] if demand is not sufficient enough to absorb
the supplies, they may have to cut output." Meanwhile, global trading firm
Vitol's 50,000-70,000t bitumen storage facility in Malaysia's Tanjung Bin is
expected to be operational in 2025. This would increase the volume of imported
cargoes and enable inter-regional arbitrage . But whether the inventories would
mainly cater to the Asian market has yet to be determined. Demand prospects
mixed Chinese consumption expectations are mixed. This year is the final year of
China's five-year economic plan and the government is set to turn its focus
toward infrastructure investment, which typically drives bitumen consumption.
The recent monetary policy announcement may also support demand. But market
participants are unsure if the policies will be enough to stabilise the real
estate sector. Higher domestic output will also weigh on import demand.
Vietnamese consumption is expected to accelerate in 2025 as many projects were
delayed because of prolonged funding issues. At least one importer estimates
that consumption will rise by 20-30pc on the year to around 1.2mn-1.3mn t as
funding issues are anticipated to subside. Thai and Malaysian demand in 2025 is
expected to be similar to 2024 levels, with a stable number of projects and
likely no change in policies. Consumption is anticipated to increase by at least
5pc on the year in New Zealand. But importers from neighbouring Australia expect
a 10pc drop on the year with few large projects and most maintenance works
limited to filling potholes, and budget availability still uncertain. Demand is
also unlikely to increase in Indonesia as infrastructure funds will remain
tight, given that the recently elected government will continue to prioritise
financial support programmes and social initiatives, southeast Asian traders
told Argus . Logistical constraints to extend Bitumen vessel availability was
tight in the last quarter of 2024 and is likely to persist into the first
quarter of 2025. Weak demand and reduced production have weighed on liquidity in
the second half of 2024, which caused some vessels from Asia to move to other
regions. But vessel tightness is likely to ease in the second half of 2025, as
several new 8,000 dead weight tonne (dwt) and a few larger vessels around
16,000-17,000 dwt are likely to be delivered in this year, market participants
said. There are far fewer new builds for smaller 5,000 dwt vessels, which may
indicate an atypical shift towards larger ships to transport bitumen in Asia. By
Sathya Narayanan, Leanne Tan, Claire Ng, and Chloe Choo Send comments and
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