Weekly Bitumen Report: Ambiguity and Confusion in the Market

During the last week, the bitumen market faced frequent ups and downs. On 18 March 2022, while crude oil stood at the level of 106 US dollars, in less than one week and till 24 March 2022, it reached 119 US dollars. Such a severe increase after the fall of 11% made the market more ambiguous.

The Russia- Ukraine war is passing its fifth week and the military analysts believe that Russia’s military power has decreased and they are mainly bombarding the cities.  Considering people’s resistance in Ukraine, the future of this war is vague and its effects on the energy crisis is worrying.

Iran is spending its New Year Holiday from 18 to 25 March 2022, but based on the obtained analyses, an approx. an increase of 14.5% on the base price of vacuum bottom is predicted and hence from Saturday i.e. 26 March, the announcement of new rates is expected.

The JCPOA negotiations faced another suspension so that the both parties can review their conditions and check if they can fulfill each other’s request to return to JCPOA or not and the final conclusion is not clear yet but the analysts believe that it is more probable to be recovered.  As a result, the US dollar experienced a devaluation against Iran Rial in the last days of the Persian year.

The sinusoidal pattern of crude oil created confusions in the market for the importers and exporters of bitumen and other oil products.

On 16 March 2022, the Indian refineries increased bitumen prices around 17 US dollars and the stability or a slight increase is predicted on 1 April in India.

On 18 March, the difference between bulk bitumen of Singapore (539$/MT) and F.O cst 180 (595.590$) was less than 100 US dollars. On 24 March, these numbers were 541$/MT and 693.300$ respectively, with more than 150 US dollars. Such a gap that was frequently fluctuating during the week can be known as another sign of ambiguity in the market and the role players of the market are not sure how to follow the trend of the market.

As already mentioned, the shipping lines have applied BAF surcharges since 15 March and it will increase the transportation costs too.

Considering the serious ambiguities in the market in terms of crude oil prices and JCPOA negotiations, Infinity Galaxy strongly recommends to follow the “Spot Cargo” strategy and maybe it is not an appropriate time for long term investment in the market of bitumen.

This article was prepared by Razieh Gilani, the sales manager of Infinity Galaxy (www.infinitygalaxy.org).