The Global Bitumen market soars amidst Conflict and Energy Fluctuations
In the wake of over a month-long conflict in the Middle East, leading to tragic human losses with casualties exceeding 12,000, the global energy sector is witnessing significant turbulence. This turmoil is particularly evident in the bitumen market, a crucial component in construction and infrastructure.
As the conflict commenced, crude oil prices soared, surpassing 90 USD and were even projected to reach 115 USD. However, this trend saw a dramatic reversal, with prices plummeting to a three-month low, culminating at 79 USD on November 9. This decline occurred despite Russia and Saudi Arabia’s continued voluntary production cuts.
Analysts from ING Bank highlight a market shift from supply concerns in the Middle East to demand focus. Meanwhile, the American Petroleum Institute (API) reported a substantial 12 million barrel increase in US crude oil storage over the past week.
China’s commercial data further influenced these trends. Although October 2023 saw a notable rise in China’s crude oil imports on a monthly and yearly basis, a sharp decrease in refinery product exports was also recorded. Chinese refiners, grappling with low margins and reduced export quotas, scaled back production. Energy Aspects, a consultancy institute, consequently revised its forecasts for China’s crude oil refinement in the last quarter of 2023 to an average of 15.650 million bpd.
This scenario is compounded by anticipations of a warmer winter, which could dampen fuel demand, thus impacting prices. On November 8, Singapore’s HSFO CST180 witnessed a 12 USD drop, settling at 440 USD. Bitumen prices in Singapore and South Korea adjusted to 505 and 405 USD, respectively, with Bahrain trading at 400 USD. European regions also experienced a decrease to the 430-500 USD range.
In India, bitumen prices dropped by 10 USD amid the Diwali festival, contradicting the usual price surge expected during this period. Iran’s market remained stable despite anticipations of a price shock following a new circular. The decline in demand and crude oil prices mitigated potential market shocks, leaving export prospects uncertain.
Furthermore, on November 8, there was a notable lack of interest in purchasing vacuum bottom, a key bitumen component, with sales encountering minimal competition.
This intricate web of factors, from geopolitical tensions to regional economic policies, underlines the volatility of the global bitumen market. As it aligns with the fluctuating crude oil prices, the market remains in a state of cautious anticipation, especially regarding future pricing trends in the Iranian bitumen market.
The construction industry, policymakers, and investors must stay vigilant, adapting to these unpredictable shifts that shape the economics of building and infrastructure development worldwide.
