Iran Reduced VB Prices by 6-7$ in September 2020

Razieh Gilani from Infinity Galaxy discusses how the future market of bitumen will be in the next 2 months.

The final decision about the Dispute Mechanism was announced on 20 September 2020 in which the USA aimed to apply more sanctions against Iran, although Iran has an opposite point of view regarding the application of this mechanism. The outcome of this mechanism was reflected in the USD exchange rate that increased drastically. Besides, it is worth mentioning that organizations like IOCL and BPL in India did not change the bitumen prices in their markets. 

“Snapback Mechanism” or “Dispute Mechanism” has some points which shall be taken into consideration:

1. Although the USA applied “Dispute Mechanism” against Iran finally, England, France, and Germany did not agree with it.

2. This is legal litigation in which the USA asks the UN to apply all the sanctions against Iran comprehensively!

3. The impacts of this decision can be seen within the next few weeks that which countries will obey the USA’s decision.

4. Only in the next months, the world can say whether it was a proper decision in the history of the USA or not.

As it was expected, USD increased against Rial and by the coincidence of influenza and COVID-19 by the beginning of autumn and new limitations of global quarantine, the demand of fuel and oil decreased and as a result, Iran decreased the VB rate about 6-7$/MT and issues like “Snapback Mechanism” and the USA presidential election led to the decrease of demand in the market, hence the future status of the market cannot be analyzed easily.

Based on the current situation, still, Infinity Galaxy recommends not to look at the business of bitumen as an investing market and the strategy of purchase- sale can be the best possible way till the middle of November 2020 (after the USA presidential election).

This analysis has been published in the Bitumart website.

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