<article><p class="lead">Iranian bitumen prices hit above $200/t fob Bandar Abbas this week, the highest level since the Covid-19 outbreak began to hit markets, supported by a sharp rise in vacuum bottom (VB) feedstock prices. </p><p>Deals and discussions were at $215-225/t fob at this week's close, up by another $20/t from last week's close of $200/t. The last time prices were above $200/t was in early March. </p><p>There was a similar increase of $20/t for deals of and discussions for prompt drum cargoes at $285-295/t this week. </p><p>The oil refining industry contractors association (Orica) increased VB prices by about $5/t in its 21 November revision, in line with hikes in crude and fuel oil prices. This week's rise in bitumen prices is expected to continue in the near term, supported by firm trends in the crude and fuel oil markets. </p><p>VB allocations on the Iran Mercantile Exchange have been restricted for domestic bitumen producers that use pipelines to receive the feedstock from refineries. Expected constraints on feedstock supplies further boosted demand for VB and, in turn, bitumen prices this week. </p><p>By mid-week, sentiment was further bolstered by the strengthening of the Iranian rial against the US dollar. This further pushed bulk bitumen offers to $230-240/t fob, while fresh discussions for drum cargoes touched $300-310/t.</p><p>The upswing in prices started in early November with the steady hike in VB prices. Demand from key destination markets like India has also firmed in November, but a lack of vessels between the countries has pushed buyers to accept higher offers.</p></article>
