Weekly Bitumen Report: The Unprecedented Recession in Export Markets of Energy and Commodities

In the 12^th week of Russia- Ukraine war, fuel and crude oil did not experience a significant growth. The range of crude oil was 110- 115 US dollars. Infinity Galaxy previous reports repeatedly mentioned the minimum and maximum level of 105 and 115 US dollars till the end of May, respectively.

The market trend verifies that people have adjusted themselves with the world circumstances. China is obsessed with COVID-19, and is trying to come out of the lockdown and this happening can lead to positive developments in the markets of energy and commodities. The war that was expected to end within 3 days is turning into erosive long-term war between Russia and Ukraine. Recession and inflationary stagnation are strongly observed all over the world. In such critical situation, the analysts believe that the world is entering an era of recession and this recession can be seen in the level of demands in the market.

In the last one week, there was a considerable chaos among the global suppliers of bitumen. Bahrain fixed its bitumen price after a fall of 20 US dollars. Singapore bitumen price was fluctuating with a range of 25- 30 US dollars. Singapore fuel also fluctuated up to 40 US dollars, and the difference of prices between Singapore fuel and bitumen was sometimes less than 10 US dollars and sometimes it was higher than 50 US dollars.

India decreased its fuel price 11 US dollars in the mid of May. Also bitumen price in India increased up to 3 US dollars. It is heard on 1 June; India will see a huge drop of bitumen price by about 20 US dollars. Such situation is expected in Iran too. At the beginning of the month, there was a fixed level of vacuum bottom price but there is a possibility of minimal price drop in Iran by the second half of the month. This global confusion that roots in the level of demand, fluctuation of crude and fuel oil price, and uncertainties of buyers and producers of bitumen have decreased the level of export to the lowest possible level comparing to the last year. As in less than one month, the monsoon will start in some of the East Asian countries, there cannot be any clear estimation of June market.

The shipping lines do not have a stable market either. Their plan to apply GRI is being postponed for the last three month and the final decision is to apply BAF for some of the ports like Jebel Ali, Mundra, Nhava Sheva, and Kandla from 1^st June. They are trying to attract the customers by offering lower ocean freights but at the same time, BAF is being applied too. This duality in their industries reveals that the shipping lines are aware of dissatisfying situation of export in the world.

During the last one week, the Iranian refineries did not compete on vacuum bottom in the IME that shows uncertainties in the bitumen market.

Also, WTI exceeded Brent two time in last week and some of the analysts interpreted it as a significant sign to investigate the market trend while some other analysts believed it was a seasonal event that happened in the driving season of the USA.

JCOPA is still passing its unclear days after 3 months and although the parties are willing to finalize the agreement, there are still some oppositions ahead. The equity of US dollar against Iran Rial is now almost fixed after the increase happened in the last 2 weeks.

It seems that the global confusion is ruling the market and like the last weeks, Infinity Galaxy recommendation is to avoid any massive investment and follow the spot purchase strategy.

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