Asia-Pacific exerts pull on Mediterranean bitumen
Bitumen trade from the Mediterranean region to Asia-Pacific appears to be increasing, as demand falls and prices ease west of Suez.
This will be welcome to producers in the Mediterranean region. The US market closed as an outlet after a run of activity in the summer when US prices were around $200/t higher than in Europe, but now that price spread has narrowed to close to parity as demand there slides.
Demand for bitumen in much of Europe, including the Mediterranean region, is falling as colder weather approaches and paving activity subsides. A more significant drop in work is likely from late-December through to February
In November the price difference between the fob Mediterranean bitumen index up to the fob Singapore index (ABX1) averaged $196/t, and this hit $217/t on 25 November. Singapore prices have more recently come under pressure from slowing regional demand, as the lunar new year holiday approaches.
The 30,100 dwt Blacksmith, operated by trading firm Trafigura, loaded a 28,500t cargo from Taranto, Italy, on 17 November and is scheduled to arrive at Tanjung Langsat, Malaysia, around 8 December.
Trading firm Vitol’s 37,087 dwt Asphalt Splendor loaded at Agio Theodori, Greece, on 24 October and has since discharged partly into Mesaieed, Qatar, on 7 November, before a further discharge in Kemaman, Malaysia, on 27 November, according to vessel tracking data.
But traders said access to such large vessels and high freight rates are limiting factors for this trade.
Delegates at this week’s Argus Asia-Pacific Bitumen conference in Singapore heard how divergences in global prices have changed supply options for buyers in Asia-Pacific and Africa. Iran’s prices are no longer the world’s cheapest, although some in the market think the risk premium should be greater when considering neighbouring markets not under sanctions were only marginally more expensive, and Iran has priced above Mediterranean supply recently.
Since January 2021 Iran fob bitumen prices have been on average $95/t below those of Italy’s fob export prices and hit the widest discount of $200/t in May this year. But this gap has since narrowed, and Iran was around $10/t higher than Italy in November. Iranian prices have risen in the past two months, on a tighter supply situation and escalating costs including for vacuum bottoms, although more recently the price rally has reversed as demand slows down.
Source- Argus Media Group