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.
