A Bitumen Price Wave On the Way

Due to the New Year holiday in Iran, the internal market was almost quiet. Companies were busy with their last year commitments. The shipping lines were in the same situation, only two direct vessels sailed out to the Indian ports.

Monitoring bitumen prices in Iran within the last year shows that from the beginning of the year till the end, prices increased more than 3 times. It happened because of the exchange rate in the NIMA system, the jump in fuel price and the strong competitions among the refineries.

In the upcoming week, we can expect significant growth in the market since:

• Demands are rising from different regions by the end of the official holidays in Iran
• Bitumen price has globally increased in Singapore, Italy, South Korea, Greece, and Bahrain
• Selling Iran crude oil in OPEC has started with a range of over $60
• Internal inflation is more than 30%
• Ocean freight has increased and there is a shortage of containers among the shipping lines
• During the pandemic of COVID-19, all the businesses were affected by heavy losses and now by the start of vaccination, they hope to recover the losses.
• Removing TAX exemption on bitumen export leading to at least a 4.5% increase in the base oil price
• In 2020, many of the bitumen producers in Europe and Far East Asia were expecting to gain considerable profits by producing Low Sulphur Fuel Oil (LSFO), so they stopped their bitumen production to produce LSFO. Therefore, by the outbreak of COVID-19 and the increase of bitumen demand in the market, there were a limited number of the supplier. The results can be observed in 2021.

By the official start of working days in the Iran market, the new VB price will be released by IME. Based on the estimations, we will see an increase of 4.6%. It is also expected to face an increase of $7-8/MT in the bitumen price of the Indian market.