It can be said that fundamental factors triumphed over technical ones in the wake of significant political events that affected commodity markets, including bitumen, over the past week.
Iran and Saudi Arabia, two Persian Gulf superpowers, announced on March 10 that they had reached a political reconciliation through China’s mediation. As a result of this agreement, on the first day of business in Iran, the value of the US dollar fell from 600,000 Rials to roughly 440,000 Rials. Thus, the price of bitumen in Iran unexpectedly rose to 40 USD.
The sudden devaluation of the US dollar against the Iranian rial caused market disruptions last week, and even the export market in Iran saw pauses in recent working days due to the rise in local costs that we previously mentioned, the fierce competition over vacuum bottoms up to 120 percent, and other factors.
On the other hand, new vacuum bottom prices were announced, which caused a rise in production costs of about 10% and a consequent reduction in a competition of up to 70% on average.
Economic activists and people all over the world expressed concern in the wake of these events and the bankruptcy of Silicon Valley Bank of America, which had a capitalization of 210 billion dollars. Even though President Joe Biden made it clear that America would make the necessary preparations to secure its banking systems, people are now much more concerned if the economic crisis of 2008 recurs.
His words, however, did not affect the market’s potential concerns, and reports that other American banks and institutions, including Signature Bank and Silvergate Bank of California Branch, might go bankrupt only made matters worse. Some institutions that assess bank credit also predicted that there might be a significant recession in America.
Because of this, the price of crude oil dropped into the 70–72 USD range at times. Singapore’s HSFO CST180 decreased on March 14 and 15 by up to 23 USD.
Meanwhile, as was predicted, the low bitumen stocks in India and the high demand for the commodity caused bitumen prices to rise by about 13 USD on March 15 and the market to become more disorganized.
Bitumen prices in Singapore and South Korea reached 485 USD and 430 USD, respectively, on March 15. For the first time in recent months, Iran’s bulk bitumen price surpassed Bahrain’s price for bitumen, which is still at a level of 325 USD in Bahrain.
Export operations will significantly decrease for about 2 weeks starting on March 21 and the Iranian New Year, and the market will be more uncertain during this time.
We advise economic activists in the field of oil products to follow market trends and news more cautiously, as we did for the previous three weeks, to prevent irrecoverable losses.
This article was prepared by Shirin Yousefi, the Content specialist and market analyst of Infinity Galaxy.