Weekly Bitumen Report: The Major International Incidents and their Severe Effects on the Market

Important political events affected commodity markets, including bitumen within the last week, and it can be said that fundamental factors overcame technical ones.

On Friday, 10 March, it was announced that Iran and Saudi Arabia, two powers of the Persian Gulf, agreed to restart their political relations; it came true through the mediation of China. As a result of this agreement, the equity of US dollar value against Iran Rial dropped from 600,000 Rial to around 440,000 Rial in the first working day in Iran. Hence, bitumen prices in Iran suddenly increased up to 40 USD.

The increase in local costs that were mentioned in our previous reports, the severe competition over vacuum bottom up to 120%, and the sudden devaluation of USD against the Iran Rial led to disorders in the market during last week, and even Iran export market observed pauses in the last working days in Iran.

On the other hand, new vacuum bottom prices were announced and it led to a surge in production costs of around 10% so a reduction in competition up to an average of 70% was experienced.

These events as well as the bankruptcy of Silicon Valley Bank of America with a capital of 210 billion dollars raised worries among economic activists and people all over the world. Now, people are much more worried if the economic crisis of 2008 happens once again, although President Joe Biden clearly said America will do the necessary arrangements to secure the banking systems of America.

However, his words did not lessen the potential worries in the market and even the rumours about the bankruptcy of some other American banks and institutes such as Signature Bank and Silvergate Bank of California Branch worsened the situation, and some of the institutes of bank credit assessment predicted the possibility of a significant recession in America.

As a result, crude oil prices entered the channel of 70 USD and sometimes fell up to 72 USD. Singapore’s HSFO CST180 decreased up to 23 USD on 14 & 15 March.

In the meantime- as it was expected- the reduction of bitumen stocks in India and their high demand led to the increase in bitumen prices in India by around 13 USD on 15 March and the market found a more confused form.

On March 15, Singapore’s bitumen price reached 485 USD and South Korea’s bitumen stood at 430 USD. Bahrain’s bitumen price is still at the level of 325 USD and for the first time in the last months, Iran’s bulk bitumen price became higher than Bahrain’s.

Since 21 March and the start of the New Year in Iran, export operations will considerably decrease for approximately 2 weeks and the market faces more ambiguity.

Like the last 3 weeks, Infinity Galaxy advises the economic activists in the field of oil products to chase the market trends and news more carefully to avoid irrecoverable losses.

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