Singapore bitumen export prices likely to fall further

Market: Oil products
22/11/24

Singapore seaborne bitumen prices are expected to continue falling in the near term because of limited import demand from southeast Asia and competitive offers from other exporting regions like south China and Thailand.

The daily fob Singapore ABX 1 prices were assessed by Argus at $445/t on 21 November, while the weekly prices were last assessed on 15 November at $452/t, down by $7.50/t on the week.

Singapore prices have been on a downtrend since the end of October, when demand for November- and December-loading cargoes slowed because of atypically low consumption in key importing countries like Indonesia and Vietnam. This led to insufficient ullage to continually procure cargoes.

While prices reached the highest level since mid-November 2023 to $467.50/t on 27 September, tight supply offset limited demand](https://direct.argusmedia.com/newsandanalysis/article/2607417) and kept prices at the same level for most of October, before falling to $465.50/t fob Singapore on 25 October.

Consumption in Vietnam has increased in the current quarter albeit slowly, especially in the north, but prolonged inclement weather in the southern and central regions has failed to lend support, Vietnam-based importers and southeast Asia-based exporters told Argus.

Budget constraints and project cancellations have weighed on Indonesian consumption despite the last quarter being the usual peak demand season, Indonesia-based importers said. Domestic production stood at normal levels, making supply outpace demand, they added.

The end-year consumption outlook is currently lower than previously expected, with spot cargo requirements also limited by term import commitments, regional imports said.

Although consumption for Singapore-origin tank trucks remained stable from Malaysia — where a key refiner stopped producing bitumen in the first half of 2024 — there was no additional demand from Malaysia to support Singapore exports, market participants said.

The weekly Singapore tank truck prices were assessed at $505/t ex-refinery on 15 November, down by $12.50/t on the week. Prices rose to their highest level since mid-December 2022 at $531/t ex-refinery in the week of 11 October, when Singapore refiners had to ration the available cargoes to tank truck dealers, but Malaysian demand started to ebb because of the northeast monsoon.

Overall Australian consumption was also lower than in previous years on the back of budget constraints. While current consumption was up on the month because of pent-up post-winter demand, spot cargo import requirements are unlikely to rise, Australia-based importers said.

Singapore exported about 2.28mn t of bitumen over January-October, down from 2.64mn t during the same period last year, latest data from Global Trade Tracker (GTT) show. Of the total, 1.47mn t was exported to southeast Asia, down from 1.64mn t during the same period last year, while 605,000t was exported to China, compared with 751,000t.

Meanwhile,southeast Asia-based exporters have noted that supply from Singapore is outpacing demand, as many importers prefer to procure incremental requirements from Taiwan, Thailand, and south China as offers from those regions were competitive with Singapore values. This may push Singapore-based refiners to further clampdown output in the near term, they added, with a few expecting at least a 10pc cut in output in the coming months.

Some market participants told Argus that south China has transacted around 30,000-50,000t of November-loading cargoes, with December-loading volumes also likely around the same level. Although offers from south China were around $440-450/t fob south China, similar to Singapore values, those on a cfr basis were much more competitive because of lower freight, southeast Asian importers argued.

Thai cargoes were discussed around $5-10/t lower than Singapore values last week. The weekly fob Thailand prices were assessed at $447.50/t on 15 November, down by $5/t on the week, marking the lowest level since early September. Although one of the three bitumen procuring refineries in Thailand switched to producing fuel oil, the product's availability for exports was more than sufficient because of limited import demand in southeast Asia, market participants said.

By Sathya Narayanan, Claire Ng and Chloe Choo

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