Bitumen Sellers and Buyers in a Dilemma of Market to Find the Right Path

Bitumen Sellers and Buyers in a Dilemma of Market to Find the Right Path
May 6, 2021
3 minutes

The export market of bitumen was struggling with four main issues:

  1. The general lockdown of India that was extended till 15th May 2021 for the time being, and it is expected to be extended more. There are some information showing that some importers reduced their rate to have a chance of faster sale of their commodities to obtain cash flow quickly.
  2. Some of the oil analysts forecasted increase of Brent oil price up to 75$ per barrel that can lead to the increase of demand in the petrochemical markets.
  3. Iran and USA nuclear talks are still a main determinant of the market and positive progresses are being achieved, as a result the national currency of Iran is strengthen against US Dollar value and bitumen price approximately increased 40-50$ /MT FOB Middle East.
  4. The competitions between some private and semi-governmental refineries up to 22% on VB made some limitations for the other refineries in term of supplying their required VB to continue their normal production.

The four abovementioned factors made a very significant gap between supply and demand. Although, demands of bitumen are seen in the market, the finished costs are not matched with the capacity of target market. On the other hand, the ambiguous situation of Rial against USD prevent the exporters from accepting risks of losses by changing their income into Rial.

The daily outbreak of pandemic in India up to approx. 350,000 people in a day and the financial transactions are being processed slowly as a result of lockdowns and the whole supply chains have been affected by this situation.

Also, based on the initial announcements the increase of VB price up to 12$/MT on 8 May by the IME is due to happen .

During the last 6 months, this is the second time market is observing a gap of rate between suppliers’ finished costs and market demand. The first time happened by the presidential election of the United States in which by the election of Joe Biden, the national currency of Iran was strengthened against US Dollar and as result, the rate difference between demand and supply increased significantly and the market players adjusted themselves with the facts as the demand of that period of time was not deniable. Presently, it seems that we shall anticipate a compromise between buyers and sellers on rates as level of demands in the market is high. So a review and correction of rates by the producers and exporters or buyers is expected. With respect to the heavy competitions among the refineries, increase of VB price and achievements of nuclear negotiations, the possibility of price correction from exporters’ side is very rare and market needs to adjust itself with the changes.

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

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2 comments

Wondimagegnehu Mecha Malka

May 9, 2021

We have been supplying the Iran origin Bitumen with grades:60/70&80/100 to different International partners/GC1 Contractors in the Asphalt road construction industry in Ethiopia from 2008___2019; now we want to strengthen our supply modalities and operations in Ethiopia to at least 7 International partners mainly Chinese government based road construction companies. Thus;we need to know your supply modalities and sources in R.Iran Respectfully,Wondimagegnehu

Razieh Gilani

May 10, 2021

Dear Sir/ Madam good day please contact me over WhatsApp: +98 936 1553221