Market Objections
Over the past few weeks, most buyers in different parts of the world have asked if bitumen prices will go down. Due to this issue, many buyers gave up on their purchases and significant confusion was observed among market activists.
You need to answer this question to determine the best time for a new purchase, taking into account the factors that influence the price increase or decrease of bitumen.
At the time of writing, crude oil reached $109. Meanwhile, the lowest level of last week’s prices was 104 US dollars and the factors like a pandemic in China and releasing oil reserves in the USA did not allow the crude oil price to fall less than 100 US dollars. Seventy-two days after the Russia Ukraine war, damages around more than 600 US dollars billions and displacement of over 13 million people were estimated hence, it could be said that the effects of this war will not be regional ones for Russia and Ukraine solely and the whole world will experience long-term consequences. An increase in prices for foodstuff in the world (as Russia and Ukraine are the main producers and exporters of the wheat in the world) and an increase in prices in fuel and oil products like bitumen can be counted as the side effects of this war. These products are holding the highest level of rates during the last 7 years.
However, the buyers express that they receive low offers in the market from some of the suppliers that sound to be illogical considering the facts of the market, and hence, they conclude a fall of prices in the market, while this cannot be true since the costs of energy, operational charges at ports, and local charges in different ports have increased as a result of the current war, also the global inflation has reached its highest level in most of the countries within the last 30 years. Therefore, export products such as bitumen have higher final costs and cannot be expected to fall in price.
Inflation and Bitumen Markets
Based on what has already been shown by our team, buy-side expectations for lower interest rates can be traced back to stagnant inflation. In such a situation, prices will rise, but the decline is expected to stagnate. Such a vulnerable situation can be a very dangerous time for both buyers and sellers. Buyers run the risk of getting inferior products at the lowest prices, and suppliers run the risk of dropping out of the supply chain due to high costs. In this stagnation of inflation, the bitumen market is facing a significant decline in supply and demand compared to the same period in recent years.
Considering the above points, bitumen is as a common product of construction projects, and the price of crude oil is 510 weekly because not only the contractor cannot stop the project but also the transportation cost increases due to unknown restrictions. We have concluded that there will be no reduction in interest rates in the short term, which may fluctuate, or at least no other incidental cost reductions that are unlikely. At the same time, current tariff levels are not economical and practical in many markets, so tariff increases are not expected.
