Weekly Bitumen Report: The Shadow of War and its Unclear Impact on the Commodity Markets

During the last week, the commodity markets in all over the world were strongly under the influence of the Russia-Ukraine war. Imposing the official sanctions against Russia’s oil, gas, and coal by the USA led to the surge of crude oil price up to 135 US dollars. The threat of Russia to stop the export of gas to Europe strengthened the doubts of more increase of crude oil price even up to 200 US dollars.
In the third week of Russia- Ukraine war, crude oil dropped around 11.92% i.e. 112 US dollars as a result of probable negotiations between the two parties to have a settlement. The complicated situation of the world due to this war will lead to unprecedented international inflation and an increase in all the general expenses. This will affect the transportation industry and since 14 March 2022, the shippers will be charged for the surcharge of BAF in addition to the applicable ocean freights (Jebel Ali and Via Jebel Ali: USD 62 per TEU and NHS / Mundra / Kandla: USD 80 per TEU) and the highest records of ocean freight were observed within the last weeks. The competition on vacuum bottom was around 12-24% among the Iranian refineries. Normally, at this time of the year, the refineries are involved with their maximum capacity of production. However, it seems that the refineries and trading companies are occupied to fulfill the old commitments.
The bulk bitumen of Singapore reached up to 560 US dollars on Wednesday which was a completely new record and India is expected to experience another increase of about 30 US dollars on 15 March.
Besides the international complications, it seems that within the next days and before the start of Nowruz in Farsi-speaking countries, Iran and 5+1 countries will reach a new conclusion, and hence the equity of the US dollar against Rial will reach its lowest level. This fall of the dollar, fear of purchase among the buyers, a severe increase of crude oil, and international inflation have lessened the purchase power of the clients which is the beginning of “Inflationary Stagnation” which was already warned by Infinity Galaxy.
On the whole, it seems that as long as there is no clear estimation of Russia- Ukraine war, the post-COVID conditions, and other crises, there cannot be any plain forecast on the market trends too and the role players of the bitumen market are advised to focus on spot cargo sales or purchase.
This article was prepared by Razieh Gilani, the sales manager of Infinity Galaxy (www.infinitygalaxy.org).

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