As October went on, WPB says the Northeast China bitumen market entered a sharp decline. Falling crude prices, the onset of hard winter weather, and weakening seasonal demand led to collapsing prices. The attention of the market has since turned to winter storage plans.
Price Developments and Market Dynamics
In October, the Northeast market for bitumen showed no hint of seasonally normal strength. Instead, both trading volume and spot prices eased down.
By October 20, the average transaction had dropped to approximately $533 a ton, or $18 a ton from late September.
The lowest market quotation fell even further to approximately $493 a ton, down $35 a ton for the same time frame.
Key Drivers Behind the Downturn
1. Weakness in Crude Oil Erodes Cost Support
In the wake of the early-October holiday, a succession of global events drove oil prices lower more quickly. The Israel-Hamas ceasefire eroded geopolitical risk premiums, and world oversupply fears resurfaced.
Added to these was renewed trade tension after U.S. political commentary startled investors. WTI crude futures fell below $60 per barrel, one of the steepest single-day drops in months.
This sudden loss of cost support caused refiners and traders to cut northern China bitumen prices.
2. Cold Front Soon Brings Construction Demand to a Halt
From October 16 to 21, the strongest cold wave of the second half of the year swept through China, bringing widespread frost and low temperatures.
In Liaoning and northern North China, first frosts were seen, and daily means dropped below 10 °C for several consecutive days.
The majority of Northeast's modified bitumen units closed by mid-October. There were only a few tiny construction projects left, and overnight demand evaporated — a key trigger to the spectacular collapse of spot prices.
3. Neighboring Market Weakness Adds Pressure
The Northeast relies in part on Hebei and Shandong refineries to make up for its meager local production. Both, though, were pressured to cut prices further as demand dried up throughout north China.
As of October 20, the bottom Hebei quote dropped to about $469 per ton, down $42 per ton from last late September, and Shandong's bottom price slipped to about $461 per ton, down $24 per ton.
These synchronized cuts boosted bearish sentiment and drew Northeast spot prices lower still through cross-regional competition.
4. Escalation of Refinery Capacity Growth Adds to Selling Pressure
Independent refineries in Liaoning restarted or boosted bitumen production in October. Local trade deficits were negligible, and inventories built up quickly.
With weak demand, refineries began cutting prices prematurely in order to keep cash flowing and shed inventories. Even with modest production levels, winter continuation plans have kept pressure on the market.
Look Ahead: Winter Storage is the Point of Focus
With both demand and price having declined, industry focus has shifted towards winter storage plans.
Future pricing will largely depend on Shandong and Hebei refineries, serving as a benchmark for the Northeast market. Refineries within the domestic market, despite their ability to control their own price, still lack strong influence compared to external suppliers.
At present, construction conditions in Shandong and Hebei remain manageable, and refining margins continue to be positive. This indicates that the winter storage season is still in its early phase, leaving room for further price adjustments.
Given weaker expected demand, analysts predict Hebei’s winter storage price may drop below $463 per ton, compared with roughly the same time last year.
Conclusion
October's trend in Northeast China was determined by a combination of global and domestic forces — declining crude prices, vanishing seasonal demand, and refinery oversupply.
As participants prepare for winter storage, the next few months will test the strategic chops of producers and traders.
Despite uncertainty, there is one theme in consideration: the bitumen market of the region is entering a cautious period of inventory correction and price re-aligning, setting the tone for the subsequent winter months.
By Bitumenmag
Bitumen, Price, Market
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