China’s Bitumen Production Declines Amid Rising Costs and Weak Demand

Due to the ongoing rise in costs and weakening demand, China’s bitumen production in July is set at 2.09 million tonnes, a reduction of 72,000 tonnes, or 3.33%, compared to the previous month. This decrease may result in a supply shortage, according to OilChem.

Since the United States extend the current sanctions on Venezuela in April 2024, the discounts on bitumen mixtures have reached a low point. However, with global crude oil prices rising, the absolute prices of bitumen mixtures have exceeded those of last year. This has not only reduced China’s imports and port stocks of bitumen mixtures but also increased the costs for bitumen refineries. In response to lower profit margins and declining bitumen prices, domestic refineries have scaled back their production rates. According to OilChem data, the capacity utilization of bitumen refineries averaged 24.60% as of July 3, marking a 10.10 percentage point decline from the same period last year.

Moreover, the demand for bitumen entered its typical low season in July, and the overall demand is expected to remain relatively stable, which will further contribute to the reduction in bitumen supply.