IRAN BITUMEN

NEWS

Why are Bitumen prices so High? (May 28, 2008)

There are many factors which prompt bitumen prices to increase. Some of these causes are revealed beneath:

Today's prices increases are mostly affected by a product named Vacuum Bottom (VB), increasing Crude oil prices, Steel Sheets for producing steel drums, Transportation, and Availability of product.

Vacuum Bottom (VB):

In short VB is a bi product which is used to produce bitumen in multiple grades. Every month its producers adjust its sale price. This is a routine procedure for us in the industry. However; many people don't notice the routine increases because a different calendar month is being used.

Customers complain that some companies are diluting their bitumen. This may be due to the fact there are many clients who insist on lower prices. The fact is that some countries own bitumen resources are less expensive. This may become confusing as most of those supplies are spoken for. Buyers have to learn to accept that if they want additional supplies of bitumen or better qualities Iran is a good choice.

Despite Iran Bitumen losing several key markets such as China and India it has gained many in Africa as our bitumen is preferred for it superior quality and frankly speaking availability. Fortunately we don't know any companies who dilute their bitumen, but as a proactive measure mandates can save their end buyers a great deal of pain if they turn to another supplying country if they feel Iran's prices a too high. Poor quality means extractions of the roadway and breaks and puddles occurring frequently sometimes immediately after.

The fact is Vacuum Bottom is used to make Mazut and that is its strongest competitor which is driving its prices so high. In other words, there is big competition for this product which is making its value rise more and more every period. There will come a time bitumen's prices will reach Mazut's prices and that is when this factor will even out more. Already there are trends of price increases occurring in many other nations who export bitumen. For the few good suppliers in Iran iIt is a waiting game. When our prices were the most competitive in the globe we were only serving our previous clients who stayed with us through the difficult times as supplies were limited. Now virtually anyone who is willing to pay for bitumen supplies can secure a purchase.

This is due to the fact that there just isn't enough bitumen to go around for everyone and more so when the weather becomes warmer, because that is when countless projects commence. Most of those who hesitate to secure their purchase lose tens of thousands of dollars because they will be faced with many price increases caused by VB and other material needed to deliver bitumen to their ports. This is if shipping prices don't increase due to increases in fuel prices. For the past twenty five (25) months one lesson many buyers have learned is that the more they wait to purchase their bitumen the more they face price increases and sometimes temporary shortages.

Crude Oil prices:

Of course, there are better experts than us that could explain why crude oil prices are rising worldwide. With the increase in energy costs, everything is affected. Crude oil prices have been at an all time high breaking records around the Globe which has affected the prices of bitumen directly and indirectly.

Steel Sheets:

In most markets the price of steel or metal is decided on a day to day basis. This is the case in Iran. We are affected by price increases and shortages of steel in the market. Many would be suppliers may quote excellent prices but if they miscalculate they will fail you and will not be able to supply. This is very common these days, A person gets into the industry with little knowledge of these obstacles, they offer a price better than all, this way they don't need a strong history as buyer's tend to place the most value on prices. Once the few bad apples out there have received the L/C or down payment they say we cannot do it for this price and ask for more money. Out of respect for our colleagues we will refrain from continuing on this subject.

Transportation:

In Iran there are shortages of trucks. In fact, in the cold winter many trucks break down and some find new products to transport making it difficult for us to transport the drummed bitumen. We are forced to for lack of a better word sweeten the drivers or pay higher prices to the trucking company to make things go our way. With every price increase in bitumen they seem to want to increase their prices as well. This is mainly due to the economical strains faced by these drivers.

Availability:

Even if you are presently working with a bitumen supplier, our humble suggestion is that you or your client purchases at least 500 MT from our company so that we may display our ability to you. By doing this you can become more familiar with our procedures and obtain priority over new clients during shortages. This will aid us decide where we will dedicate our supplier during shortages. Many buyers become upset when we turn them down. This is your opportunity to become part of our community. As we said before as the weather gets hotter the demand for Iran Bitumen increases exponentially. This is why It is important that we have a working history together.