Change of Bitumen Resources Flow from Supply Perspective
Snapshot: In 2022, the bitumen output in Northeast China, South China and East China dropped notably, while that in Shandong and North China remained rising. Thus, the bitumen resources flowed between Southern and Northern areas in 2022, besides the traditional flow from eastern areas to western areas. However, with the newly added bitumen capacity in 2023, there may be a new situation of the bitumen resources flow.
Under normal circumstances, China’s bitumen resources mainly flowed from eastern areas to western areas, as China’s bitumen capacity was mainly concentrated in the eastern coastal areas. However, due to the great change of the bitumen output in different areas in 2022, the direction of bitumen resources flow changed accordingly.
2021-2022 China Bitumen Output
As seen from the chart, the bitumen output in Northeast China, South China and East China decreased, while that in North China and Shandong climbed, which led to a change of the bitumen resources flow in 2022.
1. With the bitumen output in Northeast China dropping, the bitumen resources in North China and Shandong flowed to Northeast China for additional supply. With higher profitability of residual oil and low-sulfur bunker oil, refineries in Northeast China showed lower interest in producing road bitumen, leading to a short supply of bitumen 90#. Thus, the bitumen 90# resources in North China and Shandong flowed to Northeast to fill in the supply gap.
2. As the bitumen output in South China declined, the shiploads resources in Shandong and East China flowed to South China for additional supply. In 2022, the refineries at Sinopec and PetroChina in South China cut the bitumen output notably. Besides, some bitumen resources at Sinopec were exported. Thus, the bitumen supply in South China got tightened. There were more shiploads resources in Shandong and East China flowing to South China than that in the past years. In particular, the bitumen unit Shandong Landbridge Petrochemical went into production, making it easier for resources in Shandong to flow south.
3. As the bitumen output in East China declined, the bitumen resources in Shandong and North China flowed to Sichuan and Chongqing for additional supply. The bitumen resources in East China can be transported to Chongqing by ship along the Yangtse River, and then flowed to the surrounding areas of Chengdu. Yet, the bitumen output in East China dropped notably, reducing the bitumen shipment to Sichuan and Chongqing. Additionally, the bitumen output in Shandong and North China increased greatly, leading to rising bitumen resources in Shandong and North China flowing to Sichuan and Chongqing.
Here are the new changes of the bitumen resources flow in 2022. With the newly added bitumen capacity and differentiated bitumen production scheduling in different areas, the bitumen resources flow is expected to see a new situation in 2023.
2023 China Bitumen Newly Added Capacity
According to SCI, China’s bitumen capacity is expected to remain rising in 2023. The 1,300kt/a bitumen blending unit at PetroChina Guangdong Petrochemical may go into production in 2023. The 2,500kt/a CDU & VDU at Jingbo (Hainan) New Material is expected to come online in Q2, 2023. China Overseas Energy Technology (Shandong) plans to produce bitumen in Q2, 2023.
1. With the supply gap in South China narrowing, the bitumen resources from other regions may decline.
The bitumen capacity in South China is expected to increase to 2,800kt/a in 2023, driving up the bitumen output. With steady demand for bitumen, the rising bitumen output in South China may fill in the supply gap, reducing the bitumen resources in Shandong and East China flowing to South China.
2. Northeast China may still be a crucial market for bitumen 90# resources in North China and Shandong.
The bitumen capacity in Northeast China was relatively high. However, the major refineries such as PetroChina Liaohe Petrochemical Company, China Offshore Bitumen (Yingkou) and Panjin Beifang Pitch mainly produced residual oil, while they were unwilling to produce road bitumen, as the price of residual oil was over RMB 1,000/mt higher than that of bitumen. Other bitumen capacity at Liaoning Baolai Bioenergy, Panjin Haoye Chemical and Panjin Yijiu Petrochemical in Northeast China didn’t produce bitumen in recent years, and they are less possible to produce bitumen this year. Only Dalian Jinyuan Petrochemical and Liaoning Hualu Special Asphalt plans to produce bitumen in the coming days. Thus, the bitumen supply gap may still exist in Northeast China. The 90# bitumen resources in North China and Shandong will possibly continue to flow to Northeast China to seize the market.
3. Central China, Sichuan & Chongqing, Yunnan & Guizhou are destinations to choose for bitumen resources in Eastern areas to flow into.
As seen from the bitumen capacity distribution, there is a supply glut in Shandong and East China, with the most intensive bitumen capacity. The excessive bitumen resources may still flow to Central China, Sichuan & Chongqing and Yunnan & Guizhou, after the resources flowing to South China decreasing.
Overall, as the bitumen capacity may be constantly newly added, the bitumen resources in Shandong and North China is expected to flow to Northeast China, and those in Shandong and East China may flow to Southwest China, besides the normal bitumen resources flow from eastern areas to western areas. Additionally, in a certain period of falling demand in northern areas, there may be a large amount of bitumen resources in northern areas flowing to southern areas.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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