The dramatic plunge of the oil, sparked by the pandemic and lockdowns, led to a huge decrease in bitumen price. Refineries and petrochemical giants were close to bankruptcy when fuel and constructions slowed down after restricting economic activities to curb the coronavirus wave. Here we intend to review all the ups and downs of bitumen price in 2020
The two important pillars of any market, supply and demand, indisputably altered in 2020. Bitumen demand extremely fell after shutting down the construction sites and confused refineries and the market. Gradually, some refineries and producers decided to cut production. The plunge in demand and supply resulted in a crisis for oil and bitumen. By the spread of the virus and death toll in February, governments decided to impose restrictions and lockdowns. Plenty of road construction projects were halted, and bitumen consumption declined sharply. Oil, a crucial driver of bitumen price, was preparing for a deep dive.
On 6th March, OPEC also declared an excessive cut in output. However, Russia reportedly refused to join the deepest supply cut since the global financial crisis in 2008. Oil underwent a drastic plunge after the event. Brent sharply fell by about 20% and reached $33. After oil, Bitumen price dived too.
At the beginning of 2020, a barrel of bitumen was sold at about $270 in Iran and $540 in Singapore. Singapore and Iran, one of the biggest producers in the Middle East, are two primary Asian bitumen benchmarks. In April, bulk bitumen reached out to the lowest price of 2020 in Singapore at $175 per ton. In May, Iran’s bulk bitumen got to $110 per ton after a 50% drop. New Steel drums plummeted 40% and got to $165 to record the lowest bitumen price of Asia in 2020. Infinity Galaxy, an international bitumen supplier, has fully reviewed bitumen price 2020 and the market in a short video as below.
https://www.youtube.com/watch?v=T84AX_Rh2bs
Bitumen Price 2021 Outlook
Fortunately, economies are recovering in 2020, and governments hope to defeat the virus soon. Vaccinations programs are running globally to fight the disease. Experts and analysts expect higher prices of oil and bitumen in 2021. Goldman Sachs has predicted $75-80 per barrel in Q3 2021. Just Recently, OPEC announced plans to increase the output. Although Saudi Arabia implicitly regarded some objectives towards the decision, it accepted to increase Aramco’s production ultimately. The output increase indicates that producers expect higher demand for summer.
Bitumen price is highly correlated with the oil price. About a month after the negative price of oil in 2020, the bitumen market experienced the lowest bitumen price of the year in Asia. The bitumen market became steadier in the new year after launching the halted construction projects in countries such as India and China. Moreover, Iran and the U.S are very likely to resolve conflicts and make a new agreement. Currently, Iran sanctions do not let the refineries supply the market. When restrictions are lifted, Iran will be a prominent exporter of bitumen in the Middle East. Due to market expectations for oil price and the rising supply, we can also see higher bitumen price by the end of the year.
The significant issue of the bitumen market has been the shipping costs since the first of the year. Freights have increased severely and become a heavy burden for traders. However, it could not stop new orders and the international bitumen rate has become more stable recently. We should, however, remember prices may be tricky sometimes. Price analysis is a very complex science requiring a high knowledge of inter-market relations. If you are working in any financial market, do not forget to keep yourself updated with the latest news. In oil and bitumen, Refineries and reputable suppliers are closely monitoring the market; therefore, they are the best channels to get valid reports. Infinity Galaxy’s experts regularly provide the latest analysis of the bitumen market to keep everyone updated.