Weekly Bitumen Report: Opposite Expectations of Importers and Exporters
On July 12, oil price increased in the deals of Wednesday when there were expectations about the fall of demand from the biggest oil exporters in the world as an increasing factor and the worries about global economic weaknesses that lead to the fall in demand.
Suvro Sarkar, the energy senior vice president of DBS Bank states that the shortage of supply should be basically seen in the third quarter of the year, but it is not clear whether there will be any failure in worries about the economic recession and cautious emotions about the increase in the prices.
In the meantime, the director general of the AIEA predicted that shortage in oil supply will be intensified by the emergence of China’s demand and the reduction in production of OPEC+ in the second half if 2023. He added that although the economic growth is weak, the level of demand in China and other developing countries is desirable.
Besides, in the monthly report of the OPEC secretariat in June, the economic return of China was a stronger increasing factor than what was expected.
However, the confusion in the oil market between the supply pressures and weak economic outlook can be clearly observed in the market.
After 2 months of various challenges, on July 13, oil prices finally reached 80 USD. However, it is not clear whether it can exceed this initial level or not.
On July 11, Singapore’s HSFO CST180 increased around 7 USD to stay in the channel of 471 USD. Bitumen prices in Singapore and South Korea reached 435 and 400 USD, respectively. However, bitumen prices in Bahrain were unchanged at the level of 390 USD.
Bitumen price in Spain and some other European producing countries increased while the situation of East Asia was not much promising.
In India, there are still no clear estimations about the bitumen price increase or decrease in the second half of July, but this coming change, whether up or down, is probably around 5 USD. However, due to monsoon season in India, no growth was observed in demand level.
In Iran, by the relative stability of Rial against US dollar, the level of competition among the refineries increased once again, and the record of 75% competition over vacuum bottom purchase was registered. Hence, a significant surge in bitumen price in Iran was seen, and the additional factor of port congestion in Bandar Abbas has made the export situation more complicated.
To find a clear direction of the market, we should wait to see how the current gap between buyers’ willingness to price reduction and the tendency of exporting for price increase will be recovered.
However, like in previous weeks, the Infinity Galaxy team is willing to provide the role players of the market with clear insights and guidelines in such vague situations.
This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy (www.infinitygalaxy.org).
