15/04/26
Iran war drives up African bitumen truck prices
London, 15 April (Argus) — Bitumen truck supply prices are rising sharply in key
sub-Saharan Africa markets as increased in cargo and container shipped values
feed through. The biggest effects have been in east and central African markets
like Kenya and Democratic Republic of Congo (DRC), where the construction
sectors rely on Mideast Gulf supply, mainly from Iran, of bitumen in drums, bags
and bitutainers for the bulk of their road paving requirements. Prices in
Nigeria and into landlocked west African markets, and in southern Africa, have
also been rising steadily, or in some cases sharply, with more gains likely in
the next few weeks. But sub-Saharan African suppliers say there has been little
evidence so far of demand destruction, as construction companies broadly
maintain their buying patterns to get project work done. A supplier of bulk and
drummed bitumen into east and central Africa said ex-Mombasa, Kenya, truck
prices had jumped to 150-170 Kenyan shillings/kg ($1,159-1,313/t), around 40pc
up from KSh95-100/kg just prior to the 28 February start of Mideast hostilities.
Ex-works Nairobi values are now KSh165-175/kg, while massive gains in diesel
import prices are adding to the rising cost of delivering trucked bitumen into
inland east and central African locations. The price gains have followed a rise
in fob Iran bulk and drummed export values, and massive container shipping
freight rate increases since war risk surcharges were imposed by leading
international container shipping lines early in March. Argus assessed drummed
bitumen freight rates from Bandar Abbas/Jebel Ali to Mombasa, Dar es Salaam in
Tanzania, and Djibouti at $230/t last week, compared with $90-100/t, $95-110/t
and $110-120/t respectively in the last week of February. Nigerian, South
African receivers hit In Nigeria, which is supplied with bulk tanker cargoes
usually loaded at Abidjan, Ivory Coast, and in the Mediterranean region, truck
price increases have been more modest. Some suppliers are still working through
stocks at Nigerian terminals of imported cargoes loaded before the
US-Israel-Iran war began. Most Nigerian prices have reached 1.35mn naira/t
($998/t) ex-works, with some indications now inching up to N1.35mn-1.4mn/t. Some
local sales were being made until last week at N1.25mn/t. Domestic truck prices
in February were around N1.2mn/t ex-works. Market participants expect values to
rise substantially in the next few weeks, once suppliers switch to selling
imported bitumen loaded after the war began. Other west African buyers have
already been hit by much bigger increases. A constructor in a landlocked west
African market reported a 40pc rise in April supply price versus March for
bitutainer flows from Lome, Togo. Those reached $755-760/t ex-Lome terminal for
pen 35/50 bitumen, plus a $150/t truck transport cost, to yield a $900-910/t
delivered price range. Domestic truck prices in South Africa, with the same
values applied for onward truck exports to its southern African neighbours, were
assessed 1,000 rand/t higher last week at R12,500-13,000/t ($749-779/t)
ex-works, compared with R10,200-10,700/t ($639-670/t) in the last week of
February. Some supply prices have gone up far more dramatically this month, to
around R14,500/t ($885/t) ex-works, a South African supplier said today. The
sharp gains are partly linked to a halt of competitively priced bitumen tanker
cargoes loaded at Mideast Gulf ports, leaving South Africa almost exclusively
now dependent on Mediterranean region — mainly Turkish and Greek — cargoes that
head around west Africa to deliver to Durban and Cape Town. Argus assessed Greek
fob cargo prices at $605-610/t last week, up from $386/t in the week ending 27
February. With indicative freight rates added, these cargoes would land in May
at around $810/t CFR Durban before port handling, trans-shipment and terminal
storage costs are added. The effect on the South African road construction
sector is likely to be mitigated by the upcoming southern hemisphere winter
activity slowdown from May to August, which typically cuts bitumen requirements
by around a half. By Keyvan Hedvat Send comments and request more information at
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