Weekly Bitumen Report: Shall the Bitumen Prices Fall?

During the last weeks, most of the buyers in different regions of the world were searching whether the bitumen prices will decrease or not? Due to this matter, many of the buyers stooped purchasing and significant confusions were observed among the market activists.

In response to this question, we should consider the factors affecting raise or fall of bitumen price to decide on the best possible time of new purchases.

At the time of preparing this report, crude oil reached 109 US dollars. Meanwhile, the lowest level of last week prices was 104 US dollars and the factors like pandemic in China and releasing oil reserves in the USA did not allow the crude oil price fall less than 100 US dollars. Seventy two days after the Russia- Ukraine war, damages around more than 600 US dollar billions and displacement of more than 13 million people were estimated and hence, it can be said that the effects of this war will not be regional ones for Russia and Ukraine solely and the whole world will experience long-term consequences. Increase of prices for food stuff in the world (as Russia and Ukraine are the main producers and exporters of the wheat in the world) and increase of prices in fuel and oil products like bitumen can be counted as the side effects of this war. These products are holding the highest level of rates during the last 7 years.

However, the buyers express that they receive low offers in the market from some of the suppliers that sound to be illogical considering the facts of market and hence, they conclude a fall of prices in the market, while this cannot be true since the costs of energy, operational charges at ports, and local charges in different ports have increased as a result of current war, also the global inflation has reached its highest level in most of the countries within the last 30 years. Hence, an export product like bitumen will find higher finished costs, hence it is difficult to expect fall of rates. Based on what was already pointed out by Infinity Galaxy, the expectation of fall of rates from buyers’ side can be attributed to inflationary stagnation. In such situation, the goods are facing increase of prices but their falls are anticipated to the stagnation. Such a fragile situation can be a very risky period for both buyers and sellers. The buyers are at risk of receiving off-quality products with the least prices, and the suppliers are at the risk of going out of the supply chain due the high applicable expenses. In this inflationary stagnation, the market of bitumen has faced a considerable fall of supply/ demand comparing to the same period of the last years.

Considering the abovementioned points and as bitumen is known a general product for construction projects and the contractors cannot stop their projects, as well as the increase if shipping costs with an unknown limit, crude oil price with an oscillation of 5-10% weekly, it can be concluded there will not be any fall of rates in a short term or at least if there will be any reduction in other lateral costs that seem to be unlikely. At the same time, the increase of rates cannot be expected as the current level of rates are not economical and workable in many of the markets.

Infinity Galaxy strongly recommends the buyers to avoid the offers that are too far from the facts of the market. Besides, they are also recommended to avoid long term investments.

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