Asphalt: Asia-Pacific market commentary

: Oil products
07/04/10

Singapore
Prices are up this week to $260-265/t fob for bulk spot volumes on the back of rising fuel oil prices and expectations of stronger demand in late April and May. Market participants are expecting prices to increase further for May.

Domestic prices are also showing signs of recovery on the back of the current fuel oil prices. The ban on Indonesian sand exports to Singapore since earlier in the year has been affecting the demand of asphalt for building projects in the country.

One producer was said to have sold about 8,000t for May-June loading at $265-269/t. The producer’s truck deliveries to Malaysia offered at around $250/t are being taken up for the second half of this month.

Offers to Vietnam, where demand is strong, for late April are believed to be have been made at about $255-260/t fob.

Ya Wan Long, a new 6,000t vessel owned by the Cosco group and chartered by Sargeant Marine has started loading this week at Singapore and is expected to reach New Zealand in the next 15-20 days. This vessel is replacing one of the firm's older 4,200t vessels.

Another four asphalt vessels by Indonesian company BT Cosmic are expected to be available in the second half of this year. Three of these vessels – one 3,000t and two 5,000t – are new and expected to be used for regional operations, while a second-hand 1,500t vessel has been allocated for deliveries to the Far East region.

Malaysia
Although demand in the country remains muted in the current low consumption period, offers by major sellers have strengthened slightly because of higher fuel oil prices. Truck prices are in the range of 1,000-1,067 ringgit/t on a delivered basis or about $255/t fob say market sources.

A Singapore producer previously unable to get responses for offers above $245/t fob is said to be doing $248-255/t fob truck deliveries to Malaysia.

Prices by state-owned refiner Petronas remain relatively unchanged at around $230/t fob for 80/100 due to low demand.

Indonesia
The low-demand season continues in the country, keeping domestic prices unchanged for now. But rising prices in the region could boost prices when the next round of prices are announced for May say market sources.

Weak domestic demand is keeping imports from Singapore relatively low at the moment. But one party is said to be seeking a late April cargo from Singapore at about $295-300/t on a delivered basis.

Low demand is expected to carry on into the month of May as tenders for new building projects are still being finalised.

Thailand
Despite strong demand and most sellers being tied up in fulfilling their term contract commitments, there is a small amount of spot cargoes available for April and May. Producers are bullish about prices and are looking to push prices above $260/t fob for May if they have spot cargoes available.

One Thai cargo was traded for April at about $265/t fob and another three shipments to North Asia scheduled from May to July have been settled at $266/t fob.

Japan
Low domestic demand and the start of the refinery maintenance season from April to June have affected domestic prices for the second quarter. Japanese refineries are cutting their domestic asphalt price by about 1,000 yen/t for the second quarter.

South Korea
SK has no availability for both April and May owing to high domestic demand and export volumes being tied up in term contracts. S-Oil has a small spot volume available this month that is mostly going to buyers in China at slightly below $250/t fob.

China
Sinopec increased prices at seven of its refineries by Yn50-100/t early this week. But there was no change to prices at its Maoming and Guangzhou refineries in south China, which raised prices by Yn50/t last week. CNOOC followed the Yn50-100/t price increase at three refineries this week while PetroChina raised prices at three refineries by Yn100-200/t. Cfr prices for imported grades were higher by $10/t to $295-315/t this week, boosted by higher crude futures and fuel oil prices, and stronger demand in east China. Freight rates remain unchanged despite tight availability and the higher cost of fuel oil.

China imported 262,800t of asphalt in February, up by 15pc from a year earlier. Nationwide asphalt production in February was 772,631t, up by 7.1pc from the same period last year. The total production volume in the first two months was 1.6mn t, up by 17.9pc from last year.

Demand has been stronger in east China, despite projects still not having gone into full swing. Sinopec Zhenhai increased its offer price by Yn50/t to Yn3,030/t. The offer price at nearby CNOOC Daxie was also up by Yn50/t. Sinopec Shanghai pushed up its offer price by Yn100/t to 2,880 Yn/t. The tanker Janesia Asphalt III will arrive at Zhenjiang in Jiangsu province on 7-8 April with a 2,900t cargo from Thailand. In Shandong province, strong demand has been coming from many projects that have carried over from last year. The offer price from Sinopec Jinan went up by Yn50/t to Yn2,750/t.

Northwest China is another area with strong demand. Petrochina Karamay raised it offer price by Yn110/t to Yn3,160/t for buyers within the province and to Yn2,960/t for customers outside the province. Sinopec Tahe raised its offer price by Yn50/t to Yn2,550/t and Yn2,650/t for different grades. Sinopec Xi’an also increased its price by around Yn50/t.

In south China, demand is moderate compared with east China, despite it showing some improvement from a fortnight ago. The current rainy season has greatly influenced asphalt demand. Petrochina Gaofu was heard to have raised its offer price by Yn100/t to Yn2,800/t.

In northern Hebei province, a new tender emerged seeking 24,500t with 65pc requiring AH-70 road building grade and the rest for SBS modified grade. In southwestern Sichuan province, CNOOC Sichuan increased its offer by Yn50/t to Yn3,250/t, with a traded price around Yn3,150/t. Petrochina Liaohe in northeastern Liaoning province was raised by Yn200/t to around Yn3,050/t.

Taiwan
Fob prices are up this week to $260-265/t fob, driven by higher crude and fuel oil prices. CPC will begin the sale of May cargoes and onwards, from next week. It was heard that around 75-80pc of its 20,000t/month production will be sold to contract buyers, with the remaining volumes being allocated to spot sales. Formosa will also begin the sale of May cargoes of around 10,000t from next week.

India
Prices remain unchanged, with demand still going strong for April and May. But the higher prices offered by producers in the region could put some pressure on Indian prices in the coming weeks say market sources.

Small amounts of about 4,000-5,000t each month continue to be exported to nearby Bangladesh to support ADB funded projects, at around $255/t fob.

Indian Oil’s 160,000 b/d Mathura refinery in north India is scheduled to have a turnaround in May. This shutdown could see some tightness in the market.

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