Bitumen Price in 2020; an Overview of Price Collapse in the Bitumen Industry

However, like all trading activities, the bitumen market collapsed in March and April 2020, due to the coronavirus pandemic and a global shutdown. With a drop in China’s oil demand, a 30% decline was imposed on bulk and new steel drum prices of bitumen in the Middle East. The spread of the Coronavirus beyond Asia, as well as the closure of oil importing countries’ borders, was also influential on Brent crude oil, declining to $35 on March 9.

In the below table, you can see the fluctuations in the bitumen price list in 2020, reported by Infinity Galaxy, a bitumen supplier in the Middle East:

As the table suggests, in the first months of the year 2020 two, bitumen prices have seen a fall by 51pc, to $175/t. As the market was under a lot of pressure in April and May, caused by a huge demand shock. On the demand side, regional buyers were severely affected by weak national currencies against USD. Bitumen importers in Vietnam and Indonesia were struggling to pay for US dollar-denominated bitumen costs.

Due to weak demands in bitumen market, many refineries in the Middle East closed their bitumen plants. Other market participants were forced to limit their sales, because of the lack of availability of vessels.

During the same period, a historic and unprecedented decline in WTI oil prices. In April, oil futures contracts of WTI crude oil for May delivery plummeted to negative $37 a barrel, implying producers would have to pay buyers to accept oil delivery. This incident caused bitumen prices to decrease to $160/t.

Bitumen Prices Up by 5% in Summer 2020

With the start of the summer season, followed by an increase in oil consumption, oil prices started to gain a slight recovery. In June 2020, bitumen prices were also up by 5%, as the easing of lockdown measures helped global bitumen demand to improve. OPEC’s new decision to cut oil outputs by 9.7 million bpd, causing an increase in oil and bitumen prices afterward.

Bitumen exporters and importers didn’t see any major fluctuations in bitumen price in June, July, and August. In the meantime, no other political incident was influential on the price of bitumen across the world.

Bitumen Price Recovery in the 4th Quarter of 2020

In the 4^th quarter of 2020, prices of bitumen settled up by 60%, driven by positive news on the development of Coronavirus vaccines. In November 2020, bitumen prices increased to $280-285/t, its highest since March.

Major bitumen refineries in the Middle East and Asia got positive signs from the demand side, which helped them in getting back on their feet. Indian refineries, for instance, announced that they would raise bitumen prices by $50/t in December 2020. According to Argus Media, In Singapore as well, prices touched a two month high in the last week of November $302.5/t fob because of a rally in crude future prices. Based on export reports by Infinity Galaxy, deals and discussions in the Middle East were closed at $215-225/t fob for Bulk bitumen and $285-295/t fob for New Steel Drums in the last week of November.

Despite improvements in the price of bitumen, experts believe that a full demand recovery for bitumen will not happen until 2022. Experts also believe that various countries will experience economic recovery differently since coronavirus is hitting different countries in different ways.