Bitumen Prices in May 2018 may increase between 35 to 40 USD/MT
Iran Bitumen Export Ban Lifted
May 2018 News Summary
Over the past month aside from Iran Bitumen Export Ban the following events have influenced both bitumen prices and availability:
- The Currency crisis in Iran. Iran’s currency lost great value nearly 40% in the free market and 20% officially. The reasons for this historic event are still under great speculation. Some have suggested it could be both political and economic. The Iran Government is working tirelessly to control this devaluation and has deemed all free market rates as “illegal”.
- Bitumen prices fell a solid 10% which amounts to an average of 30.00 USD/MT. Due to the influx in sales which is estimated to be much more than 100,000 MT or more than the usual amount purchased from each refinery caused both Government refineries Jey Oil and Pasargad oil to go into a form of overhaul. After many years the bitumen business saw a change in sales and profitability. Of course, this was short lived and only enjoyed by a few companies which had purchased their bitumen prior to this event as all new orders were effected by late deliveries which is still ongoing. In other words the bitumen presently available in the market by a few bitumen suppliers is highly likely bitumen which was purchased at least 30 to 60 days ago which is being delivered today. It is estimated that the government refineries are at least 30 days or more behind schedule.
- The Private bitumen sector also suffered as V.B. was not vastly available and it is reported that it still is not readily available. Therefore, while demand was extremely high for all types of bitumen produced in Iran availability was actually quite low and it still is pending the new price announcement expected in the coming days. It is speculated that bitumen prices will rise due to several factors which include an in influx in sales, fluctuating currency value in Iran and increasing crude oil prices.
- Admits the difficulties attaining bitumen for export by bitumen exporters and attaining feed to produce bitumen by the private sector, Iran’s respected Government imposed a ban on all bitumen exports. This now lifted ban aims to add new a layer of venting for all bitumen exports. Presently, a new permission must be granted for the export of bitumen. Up to now this applies to all bitumen producers both Government and private. Before becoming more manageable many suppliers were negatively impacted by this sudden restriction. Those who were mostly effected by the temporary restriction in the export of bitumen were bulk bitumen buyers and exporters. Both have suffered a few days of demurrages while awaiting the new procedure for exports. It has been reported that all bulk bitumen vessels have been allowed to continue their journey.
- As Iran is about 11 days ahead in its calendar, and bitumen prices are revised each month most sales have stopped pending new bitumen prices and V.B. rates. Let us not forget the confusion in the market on how to calculate the USD value and other currency values against Iran’s currency. The choices are the legally announced 4,200 Tomans as per the Government’s decision or the free market rate which is at least 25% higher an d up to this point deemed counterproductive and illegal.
- Our company earlier this month invested in the purchase of least 10,000 Metric Tons of Pasargad Oil Embossed bitumen which we will be able to collect in the coming 10 to 14 days. As per Pasargad Oil’s rule on bitumen pricing we must wait for new bitumen rates to be released before we are actually able to know how much our final cost will be. In other words the bitumen which is not lifted from the Government refinery can only be lifted under its new value. This rule was created to protect both buyers and suppliers from sudden influxes in the bitumen market.