Weekly Bitumen Report: Will the World Experience another Recession, like 2008?

In the 108th day of Russia- Ukraine war, Russia claims to have full invasion of east of Ukraine, however, Ukraine is still defending its boarders in the Eastern regions. The war damages have been estimated over 600 billion dollars up to now. After one month, Russian missile attacks to Kyiv started again.

These factors, and the issues which was mentioned in last week report of Infinity Galaxy, were the causes of surge of crude oil price during the current week. However, the estimated range of crude oil rate is 110-125 US dollars in June 2022. The severe lockdowns in Shanghai and some other cities of China were finally over after 2 months and the main ports of China started their normal operations.

The start of normal conditions in China increased the pessimism but on the other hand, the high inflation of other countries is a concern of inflationary stagnation. For example, in the USA the average of each gallon of petrol was reported around 4.8 US dollars that is the highest level of petrol prices in the history of the USA. In supporting the high price of crude oil, China and Singapore did not decrease their bitumen prices and even in some days, the price of fuel oil CST380 was cheaper than bitumen price in Singapore.

But generally, the bulk bitumen price of Singapore was reported in the range of 580-600 USD. There is no clear data if there was demand at these levels of rates or not. Bahrain has also fixed its bitumen price at its current level. Iran experienced a variety of complicated events. On Thursday, IAEA admitted a resolution against Iran in that Iran should be responsive to some points and this decision made the situation of JCPOA negotiations more complicated and the parties threatened to leave the negotiations.

These factors led to more fall of Iran Rial against US dollar. Fall of currency value, increase of crude oil price, and lack of serious demand in the market put Iran bitumen prices in a fragile situation. There was both a tendency of price increase and a pressure to decrease rates. This fragile situation is observed in all the markets of commodities, specifically bitumen. It is heard that another wave of fall of bitumen price in India is expected in the middle of June but it is not clear how much drop will happen.

The current global factors are associating the recession of 2008 in the minds, when the world faced a significant crisis. If the current situation maintains, a global recession can be expected too. Infinity Galaxy strongly defends its previous advice to avoid any long term investments and deals should be finalized if there are real demands from buyers’ side.

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