Determining the bitumen price

Determining the bitumen price

bitumen price

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The oil prices, while justifying the price of bitumen to a degree, are not a good basis to obtain an up to date bitumen price. The bitumen industry is growing and shifting, some of the exporting nations are Singapore, Saudi Arabia, Thailand, Egypt , and with the varying production, the prices of bitumen also varies significantly.

There are no set written prices for industrial bitumen, except from compiled ones from paid subscription provides. Market participants depend on some mathematical formulas which reference the various published crude qualities.

Bitumen prices are subject to seasonal variations, peaking in summer due to the increase bitumen and bitumen derived product demand.

More importantly, industrial bitumen is mixed with a diluent (usually, C5 or synthetic light crude) for transportation via pipeline to tankers.

Therefore, the end price of delivered bitumen in directly affected by the cost of the diluent required, for where there are also seasonal changes (more diluent is required in winter due to cold temperature).

The bitumen price is high in the summer and does not reflect the yearly average costs or the economics of the business in general.

There are several reasons for the fact that the high demand for bitumen in the peak time hinders the calculation of the prices. Additionally, disruption of output from local refineries add to the problem, as well as many other situations, when bitumen and diluent are in high demand.

The lack of a general method to define the correct bitumen price, along with the seasonal shifts (which cannot be dealt with), also means that a method to define the year-end bitumen price for the purpose of reporting to the authorities also must be found.

With billions of prospective barrels and a lot of dollars to invest, industrial bitumen is widely recognized as one of the key aspects of future energy sector and attracts significant interest worldwide.

It is in the best interest of all stakeholders (investors, capital markets, regulators, manufacturers and the overall general public) that a technique to determine the year-round bitumen prices is established to fairly signify the general market conditions, without the undue effect of seasonal demand, weather or cataclysmic price shifts.

The actual acceptance of the suggested approach for all crudes would have little effect on the issue, since bitumen is just about the only product with great seasonal variations.

A few market experts suggest finding bitumen price, for reference, by using the listed pricing of crude oil after application of historical multipliers (meaning the averaged adjustments for the 12 prior months) for transformer and for the quality, to make the pricing differentiation between bitumen and crude oil.