Weekly Bitumen Report: The Consolidation of Interest Rate in the USA and its Effects on Market
While the Federal Reserve of the USA was constantly increasing the interest rate during the last year, on Wednesday 14 June and in their latest meeting, they announced that there would not be any increase in their interest rate. To control inflation, the bank increased its interest rates 10 times since March 2022.
In the meantime, some sources talk about the improvements in the economic situation in the USA, and even the latest news shows that the inflation rate in America reached the level of 4%.
However, Diane Swonk, the chief economist at KPMG in America, states that generally, the economy has found more tendency to inflation which is related to the factors like the increase of geopolitical tensions and climatic events.
At the same time, the economic data shows that by the surge of prices in the Euro regions and the drop in the expenses of the consumers, this region entered an economic recession from late 2022 to the beginning of 2023 which means 20 countries got involved with this economic crisis.
The economic signals from China are not promising, and it has had significant effects on energy prices.
However, the contradictory news, mainly negative economic ones, did not allow the oil price to exceed over 76 USD.
During the last week, oil prices fluctuated in the range of 71-76 USD. Singapore’s HSFO CST180 observed a fall of 22 USD at the beginning of the week, but it was somehow recovered on Wednesday and remained at the level of 422 USD.
Singapore and South Korea’s bulk bitumen were traded at the levels of 470 and 400 USD, respectively.
The bitumen price in Bahrain is still fixed at the level of 370 USD.
By the start of the heavy monsoon in India, this market faced a different situation. Bitumen price in India decreased by 36 USD on 15 June, so a severe fall in prices was recorded within the last month, which was a high drop from the beginning of the year.
The logistic issues between Iran and India are the other factors affecting the slowness of the export process. The vessels destined for the Western ports of India arrive at their destination with long delays, and the situation got too complicated.
However, after the latest fall in bitumen prices in India and drop in Iran bitumen prices during the last month, the current situation looks to be a good opportunity for Indian traders who plan to receive their cargoes by the end of monsoon.
As there is not any clear result about the negotiations between Iran and America, USD got a little stronger against Iran Rial. On the other hand, the significant fall in the level of competition among the refineries up to 40% was observed as a result of a fall in bitumen price.
On the other hand, the sharp decrease in bitumen price of Iran has caused it to reach the lowest price among the countries that produce bitumen in the Middle East, which is almost unprecedented considering oil price and its historical records.
However, we can expect a clear rotation of oil price with the clarification of the interest rate situation in the United States, and the market will probably get free from confusion.
Once again, the Infinity Galaxy team advises all the economic activists to carefully follow all news and can contact us regarding their purchases.
This article was prepared by Razieh Gilani, the export manager of Infinity Galaxy(www.infinitygalaxy.org).
