Tasco's asphalt sales sizzle

Tasco's asphalt sales sizzle

Asian road projects give boost to volume

SET-listed Tipco Asphalt (Tasco), Thailand's biggest asphalt maker, expects sales volume of 2.2 million tonnes this year, exceeding the previous estimate of 1.9 million as road development across Asia accelerates.

Tasco managing director Chaiwat Srivalwat said sales volume will grow 36% this year from 1.54 million tonnes last year.

"Countries across Asia have improved their roads and expanded new road facilities from China to Indonesia and Vietnam," Mr Chaiwat said. "In Thailand, demand was driven by a road improvement programme from heavy floods in many areas."

He expects sales volume to decrease slightly next year to 2 million tonnes.

Domestic sales volume accounts for 17% of the total, with 83% from China, Malaysia, Vietnam, Indonesia and Australia.

Although sales volume may ebb next year, asphalt prices may increase because of reduced demand for sour grade crude oil and insufficient supply of asphalt.

Mr Chaiwat said the asphalt supply will decrease as South Korea, one of Asia's biggest asphalt producers, revamps production units to comply with a new marine oil standard for lower sulphur content mandated by the International Maritime Organization (IMO).

The result is that the supply of asphalt volume in Asia may decrease by up to 70,000 tonnes a month starting next April.

Crude oil demand may decline in the sour crude grade, the main raw material in Tasco's asphalt, because traditional oil refineries will likely switch to sweet crude grade to comply with the IMO standard.

When the IMO regulations come into effect next year, Mr Chaiwat thinks Asia's largest asphalt refinery in South Korea will reduce the supply of asphalt in the market.

"We usually purchase very high sulphur content crude oil that sees lower demand, therefore crude oil prices should be stable or reduced," he said. "These two scenarios in the market might be positive for our value chain."

Earlier this year, the company revised the sales volume forecast to 2.1 million tonnes and revenue to 24 billion baht, but real volume may reach 2.2 million tonnes, he said.

Tasco's asphalt storage in Terengganu, Malaysia suffered a fire last year. The investigation into the incident and damage claims concluded in the second quarter this year; the toll was 345 million baht for lost assets and business interruption.

Two oil tanks are being repaired and are scheduled to resume normal operations later this month, while reconstruction of another two damaged tanks has started and the projects will be completed in the first quarter next year.

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