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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.
Copyright 2008 Iran Bitumen part of the G.D. Corporation
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