Weekly Bitumen Report: The Shadow of Inflationary Stagnation Affecting the Market Strongly

In the 85th day of martial attack of Russia to Ukraine, it seems Ukraine won some victories and excelled Russia. At the same time, Finland and Sweden requested the NATO membership and this matter raised oil price up to 114 US dollars. While, Turkey’s disagreement with this matter dropped oil price to 109 US dollars. Still it is not clear if these two countries will join NATO or not.

On 15 May, Indian refineries increased India’s bitumen prices up to 3 US dollars marginally, and it was mentioned in last week article as well, but fuel dropped around 11.5 US dollars. Some of the analysts predict a fall of 15-20 US dollars on 1 June, 2022 as well.

On 12 May, the price of fuel oil CST 180 Singapore decreased up to 580 US dollar and its difference with Singapore bitumen came to around 20 US dollars. This drop raised the worries of bitumen price fall as well. However, on 18 May, fuel oil price was recovered to 620 US dollars and its gap with bitumen increased to around 70 US dollars. 

In Iran, a complicated situation was dominant due to unclear conditions of national currency against US dollar. It was following an upward trend and hence the prices of export bitumen decreased. Besides, the predictions on a fixed level of vacuum bottom prices or a marginal decrease at the beginning of the Iranian month was another factor to face a confused market.

Generally, the export situation in May 2022 was weaker than May 2021 that can be attributed to inflationary stagnation, in which the rates are high and demands have fallen on these high prices.

The oil price was around 108 US dollars at the time of preparing this report, however, many of the analysts are looking for a modification in predicting the prices and they believe the rates might change even in the second half of 2022 with a downward wave as global demand has decreased on the current prices. Presently, no drop is observed due to production costs and global inflation.

It is heard that Shanghai lockdown will be over within next week and after almost 2 months that can lead to movements in the markets and this can be an element of oil price increase too.

The road construction projects have started in different countries and demands have increased but as the requested targets of buyers cannot be matched, many of the buyers are waiting to see if there will be any fall of rates or not.

After a two-month gap in JCPOA negotiations, it seems that the parties are attempting to recover it. It is still unclear whether this recovery will happen and if this will affect the prices or not but it is predicted that US dollar value falls around 15% in case of any agreement.

The shadow of inflationary stagnation is strongly felt on the market situation, and the level of demand is high but there is less interest on these prices. By the passage of time, it can be determined if these prices will be approved by the buyers or not. Such confusion can be found in Singapore and Bahrain bitumen as well.

At the moment and by approaching monsoon, Infinity Galaxy strongly recommends Spot Purchase strategies like previous weeks.

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