South-East Asia in Struggling for Bitumen Domestic Shortage
Export supplies of bitumen from key Asian producers have been tightened due to production cuts and stronger import demand from Southeast Asia, pushing seaborne prices to their highest levels since Q4 2023.
On September 6, Argus assessed the weekly fob Singapore ABX 1 price at $452.50/t, the highest since early December 2023, marking a $7/t increase from the previous week. Similarly, the fob South Korea ABX 2 price was assessed at $446/t, the highest since late October 2023, up by $3.50/t from the prior week. Prices for fob Thailand and fob Taiwan were also up to $450/t, the highest levels since mid-November and early December 2023, respectively.
Export supplies have been constrained since Q2 2024 due to robust high-sulphur fuel oil (HSFO) prices and weaker export margins from Singapore, South Korea, Thailand, and Taiwan. The daily fob Singapore ABX 1 price was at a discount of around $75-80/t to 3.5% 380cst HSFO fob Singapore values in March, which widened to $107.75/t on July 5—the largest discount this year.
Vietnamese demand remained weak due to monsoon disruptions, and the availability of cheaper Middle Eastern cargoes further suppressed domestic prices. Additionally, import demand from southern China has remained low because of high inventories and subdued consumption, despite ongoing production cuts.
Indonesia has been an exception, seeking to restock in anticipation of tightening export supplies from Singapore ahead of the year-end demand peak. Several Indonesian importers have already tendered for cargoes for October through December laycans.
In Southeast Asia, drier weather, the return of national highway projects in Vietnam, and higher-than-usual domestic demand in Thailand have sparked increased inquiries for Singapore and Taiwan cargoes, which has supported prices this quarter. Southeast Asian buyers have also shown interest in other Asian-origin cargoes, particularly from South Korea, which is not typically a major supplier to the region. This shift in demand, coupled with weak traditional demand from East China due to competitive domestic offers, has created a tighter supply situation.
Refining operations in the region have been limited, contributing to the tight export market. Two of Singapore’s three refineries were under partial turnaround during this quarter. The Singapore Refining Company’s 290,000 b/d refinery is expected to resume operations toward the end of September, while Shell’s 237,000 b/d Pulau Bukom refinery is expected back online in mid-October.
In South Korea, a Yeosu-based refiner issued a tender to sell 5-6 cargoes per month for the fourth quarter from its 800,000 b/d refinery, but an Onsan-based refiner (669,000 b/d) did not issue a tender for September cargoes, and it remains uncertain whether one will be issued for October. Similarly, Taiwan’s export supplies have been limited as refiners prioritize term contracts.
In Thailand, both the 275,000 b/d Sriracha and 215,000 b/d Rayong refineries have restricted production, while the 175,000 b/d Map Ta Phut refinery has shifted focus to producing more fuel oil. Meanwhile, Malaysia’s 175,000 b/d refinery has not been selling bitumen since mid-June due to production constraints but is expected to return to the market in the coming month.
As a result, Singapore-origin cargoes have been in higher demand, particularly for tank truck sales, leading some Singapore refiners to allocate more volumes to this segment, further tightening export supplies. Overall, export supplies across Asia are expected to remain limited in the short term, despite current seaborne prices being at a premium to HSFO values. Bitumen production is not expected to increase significantly in the near future.
Since late August, bitumen prices have been trading at a premium to HSFO values. On September 11, Argus assessed the daily fob Singapore ABX 1 at $460/t, a $48.25/t premium over the 3.5% 380cst HSFO fob Singapore price of $411.75/t.
