Weekly Bitumen Report: The Uptrend of Iran’s Market Unlike the Buyers’ Expectations

On the 373rd day of Russia’s war against Ukraine, Russia claimed that they crashed a Ukrainian drone near the Moscow region. This was the first drone attack of Ukraine against Russia. More time is needed to see whether there will be any changes in the war plan. At the same time, FATF which is the global money laundering and terrorist financing watchdog suspended Russia’s membership and kept Iran and North Korea on their blacklist.

Although it was heard that interest rates will increase by the central banks of some countries, oil prices did not break the falling resistance of 80 USD till 2 March 2023 and again it started its upward trend so that it touched 84.81 USD at the time preparing this report.

In the meantime, Singapore’s fuel price faced a sharp surge up to 28 USD on 1 March and reached the range of 435 USD. Singapore’s and South Korea’s bitumen was also traded at 508 and 455 USD. However, Bahrain’s bulk bitumen remained stable at the level of 325 USD.

Indian refineries announced the unchanged bitumen prices on 1 March. Considering the shortage of commodities in India, it seems that the demand for bitumen purchases in India continues during March.

However, Iran is challenging with a quite complicated situation. While Iran Rial devaluated around 35% against US dollar within less than 10 days, the foreign buyers were expecting a significant decline in the prices. This belief did not only come true but also a considerable surge in costs was observed and vacuum bottom competition exceeded over 100% for the first time.

It means the bitumen producers purchased vacuum bottom 2 times more than its base price. The shortage of raw materials, an increase in production costs, approaching the New Year holiday, and the possibility of a surge in port operation charges can be known among other reasons that will affect the possibility of more increase in the bitumen prices. In the current situation, the second and main issue is the delivery time, in addition to the bitumen prices which is heavy pressure for the exporters.

The only positive news whose effects on the export markets can be seen shortly is the impressive drop in ocean freight from the main ports of China to other destinations. This will probably lead to the modification of shipping charges all over the world. Based on China Containerized Freight Index (CCFI) which measures average Chinese export container rates, has seen a 50% decrease since February 2022 and stood at 1,730 seven weeks ago.

Finally, it should be stated that the export process is facing more challenges compared to the previous month, and the Infinity Galaxy team still advise the market activists to observe the market changes more cautiously and then make their purchase decisions.

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