Drum bitumen freight rates see sharp hikes in Iran

Bitumen freight rates for containers from Iran have seen a sharp hike in the past month on the back of a shortage of containers and vessels.

Freight rates for containers witnessed a General Rate Increase (GRI) from 15-18 August, which is now slowly being accepted by buyers in Africa and Asia. There were no significant changes with bulk freight rates.

"GRI was imposed by all shipping lines at different rates and it was negotiable depending on demand and destinations between $50-250/container" said a market participant.

Freight rates from Bandar Abbas to the UAE's Jebel Ali were adjusted by a $50-150/box ($2.50-7.50/t) range across different routes, while hikes to India's Mundra/Nhava Sheva were in a $150-250/box ($7.50-12.50/t) range. Freight rates to east Africa and China were unchanged.

Bookings of a large number of containers from Iranian shipping line IRISL to west Indian ports like Mundra and Nhava Sheva saw hikes by $150/container ($7.50/t). Several foreign shipping companies also offered freight rates at $550-670/container ($27.50-33.50/t). Rates to east African ports like Kenya's Mombasa/Tanzania's Dar es Salaam were firm at $1,550-1,700/container ($77.50-85/t). Freight rates to Chinese ports like Qingdao rose to $550-620/container ($27.50-$31/t) from an earlier $500-550/container ($25-27.50/t).

"Empty containers have been transferred to Chinese ports recently due to a shortage of containers in China," another market participant said.

Rates from Bandar Abbas to key ports in Bangladesh like Chittagong were at $1,400-1,650/container ($70-82.50/t), while rates to Indonesian ports rose by $250/container ($12.50/t) to $1,230/container ($61.50/t).

Bulk prices have become more competitive compared with drum cargoes because of this sharp price hikes. Discussions for bulk cargoes have been more active compared with drums.

While the GRI has resulted in freight prices around the region to increase, several domestic participants are sceptical whether these price hikes can be sustained.

As trade volumes for bitumen in the Middle East have been relatively suppressed because of muted demand from major importers such as India, the "ability of freight companies to continue overcharging freight rates in the long term is a lot less certain", said a UAE trader.

Buyers are also slowly reconciling themselves to the higher costs of importing from Iran. "We do not have a choice but to eventually accept this," said a key Indian importer.

There could be a further hike in drum freight rates from Jebel Ali that would include transshipment costs of shipping from Iran via other Middle East ports. This change is expected from late September, although no further details were available.