Saturday, August 22, 2009

Iran Bitumen - risks again with an alert

as I mentioned in my previous post, buying bitumen from uncertified and small workshops is risky. below you see an alert posted by Mr. Aghili, Iran Bitumen Analyst and trader:

Recently, and in the past disastrous results of road projects at the hands of emerging rings of smugglers are being revealed simply by the result of Road Projects world-wide. Due to demand for very low prices there are many of these rings increasing in today’s Bitumen market and this is why the legitimate suppliers are finding it harder and harder to compete with them.

What the smugglers do is place Mazut, Gilsonite, or Crude in the bottom of the drums before bitumen is poured on top. It is said up to 20, 40 or even 50% of the said impurities are placed on the bottom of each drums before 100% pure NIOC bitumen is poured on top. What occurs then is that SGS comes in and takes samples from the top, and gives them the SGS certification. The road contractor uses it, let's say in Sudan in their Road project not knowing that within 7 to 12 months the road which they have produced at heavy costs and time constructed will begin to fall apart in patches across the entire paved road. Many which use equipment to apply the impure bitumen are complaining of clogs in their equipment’s pipes a well.

Because, the cost of Mazut is 35.00 USD per MT and Bitumen much more. They save actually 300 USD x 500 KG which is 150.00 USD per MT. Naturally the can outbid any true supplier any time they wish. Our estimates in the past had been 20% impurities which would save them 68.00 USD per MT based on the present market rates of 335.00 USD per MT in Bulk.

We are obtaining pictures of disaster jobs as we speak to reveal them to our clients and Agents world wide. Please be patient for this.

If anyone is offering Bitumen at 10.00 USD more or less than a reliable supplier, we can say it is expected, but when someone offers 30.00 USD or 50.00 USD per MT less or more then they are actually doing it below our own cost. We base this based on our profit margin after costs of drumming and all other associated costs of exporting the bitumen. Our profit margin is no more than 20.00 USD per MT inclusive of 5.00 USD per MT for unforeseen costs or we add this to the profit margin. This all depends on the market trends.

We should not have to battle the people whom we work with, but the people whom we work with, should believe in us and educate buyers of the reason prices are as such. We would like to state that the people selling at incredible rates are very questionable. The projects which the false bitumen is prepared with last no longer then 7 to 12 months maximum.

Presently our union is gathering more information on such suppliers and confronting them where possible.

Unfortunately, SGS inspection will not break open a new steel drum unless there is previous suspicion. With these companies functioning with multiple names even that will be a small deterrent.