Weekly Bitumen Report: The Turbulent Market is Surprising its Role Players

On 31^st Dec. 2021 and when such a volatile market was not expected, Infinity Galaxy correctly predicted the calm before storm and on 7^th Jan. 2022, it was also reported that the whole determining factors of bitumen price are in line with each other and the only unknown factor can be the effect of COVID-19 in the world.

During the last week, vacuum bottom competed for between 2-28% between the refineries and due to growth of the base price of vacuum bottom up to 10%, the competitions led to the surge of rates in the market. Some of the buyers failed to place an order as they were expecting no significant change of rates in other markets. At the same time, the progress in nuclear negotiations between Iran and Europe, dollar devaluated more against Rial and one US dollar was traded about 270,000 Rial so it affected surge of bitumen prices in addition to the factor of refineries’ competitions. Singapore and other main bitumen producers of the world also increased their bitumen price as a result of the jump in crude oil price and till the time of preparing this article, crude oil touched 85.15 US dollars while in the first week of January 2022, it was around 79 US dollars.

Marine transportation is experiencing a calmer situation although it is heard that frequent waves of GRI implementation will continue till mid-2022.

The buyers in east Asia and especially in India believe that local purchase of bitumen is more economical but the fact of production limitation of the local refineries will lead to a surge of prices and long deliveries and these countries should normally have a balance between their local consumption and imported cargo otherwise their import or local production will be in troubles. Indian importers expect no change of bitumen price by IOCL on 16 January and if it comes true, the “Delivery Crisis” will rise as they face a considerable gap with global rates and an increase of rates in the local market will be expected accordingly. For more information check Bitumen Price in India.

As such a storm was not predicted by the buyers and they could not purchase sufficient material, now some of them are looking for lower prices with lower qualities to fulfill their commitment but it should be taken into consideration that delivery of non-Iranian bitumen is more critical due to issues of supply of VR by their countries of origin and their delivery of older commitments is still pending.

Within the next week, more surge of prices is expected and FOB Bandar Abbas of drum packing will exceed 415-420 US Dollars per ton and if the crude oil gets stable in the range of 84-86 US dollars, the market situation will become the same as the time before the outbreak of Omicron when the bitumen rates touched its highest peak within the last 5 years.

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

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