LONDON (ICIS)--Low European bitumen prices and high freight rates have kept arbitrages from the US closed for around two years despite it being considered a key exporter into the region, bitumen shipping industry sources said on Tuesday.
“There have been no open arbitrages from the US to Europe for a long time, possibly around two years,” one source said. “Rates [bitumen prices] are not high enough: you’d lose money by transporting material from the US.”
A second market participant agreed that arbitrages from the US to Europe have been closed for many months. “I don’t know of any occasion when this [bitumen] has moved [from the US to Europe],” the second source said.
“Sending material from the US to Europe is not economical,” another shipping source said on 18 July.
The first source went on to say there has been very little market activity in Europe for at least six months. Some of his company's bitumen vessels remain unoccupied.
“The market is very quiet, much quieter than usual,” the source added. “At this time of year, all of our vessels are usually occupied. Currently, 40% of them are looking for cargoes.”
This source was unsure of freight rates, but said they are high.
The second source added that freight rates from the US to Europe would depend on the area of the US in question. Major US ports are located on the east coast, in the Gulf of Mexico and on the Pacific coast.
This market participant went on to say that to transport 7,000 tonnes of bitumen from Baltimore, Maryland, to Europe would cost an average of $705,000 (€493,500) to containerise the material, and, based on a transit period of 14 days, it would cost $300,000 to charter a vessel.
The transport of bitumen requires special vessels, as bitumen containers have to be kept heated. Bitumen freight rates therefore differ from those of chemicals.
While European bitumen prices vary from country to country, most prices are said to be in the €430s/tonne.
Sources were unsure of US bitumen prices.
($1 = €1.70)
By: Jo Pitches
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