Tight bitumen supply in Iran drives VB demand

Tight bitumen supply in Iran pushed suppliers to purchase vacuum bottom (VB) feedstock on the Iran Mercantile Exchange (IME) on 28 September.

The fierce competition for VB on the IME may temporarily stall a slide in seaborne prices that has been happening in the past couple of weeks, market participants told Argus.

Argus assessed weekly bulk prices at $305/t fob Iran on 23 September, down by $5/t from the previous week.

Many suppliers are trying to buy VB following a recent price cut by Iran's oil refining industry contractors association (Orica). Feedstock prices were cut this week by around 16pc or $43/t to 70,630 rial/kg ex-Bandar Abbas for the current fortnight. Prices jumped to around IR95,000/kg ex-Bandar Abbas on 28 September, up by about 35pc or $77/t compared with prices set by Orica.

Trading was relatively thin because of a public holiday in Iran on 27 September as most market participants were monitoring trading on the IME. A total 6,000t of prompt-loading bulk cargoes were sold at $295-303/t fob this week. Offers were also at around $295-305/t fob versus bids at about $290/t.

Lower availability came alongside some delays in loading from the Bandar Abbas port because of vessel congestion. The delays were particularly for vessels heading to south Asia.

By Sathya Narayanan