Asset owners of roads and other key consumers of bitumen are not only demanding better product performance and durability, but also better predictability of costs. Although there are a number of factors that impact total project cost, bitumen cost is a significant contributor and therefore any volatility in bitumen prices can significantly impact project profitability and cash flow.
Factors impacting bitumen price
Bitumen prices are impacted by the same factors that impact global oil markets, such as significant geopolitical events. However, bitumen prices are most significantly impacted by other factors such as regional product availability and storage capacity, shipping costs and exchange rates. In recent years these factors have resulted in significant price volatility; over the last few years prices have fluctuated by more than 90%.
(2 | Argus Asphalt Report - FOB Singapore prices Jan 2013 - May 2015. Argus Bitumen, Asphalt Report, Issue 15-003, Feb 2015 and Platts)
Impact on your business
The impact of price volatility of bitumen on your business depends on your ability to recover changes in your bitumen price from asset owners, which in turn depends on their requirements.
A misalignment between your bitumen procurement arrangements and contract with the asset owner can make managing your budget challenging.
Understanding your risks
Difficulties in budget management due to limited ability to recover price changes from your asset owner can be a significant risk to running your operations profitably. At Shell, we believe that the health of our customer’s business is critical in building a long term relationship. Our dedicated account managers are on hand to work with you to identify your risks linked to bitumen price and develop customised solutions with you to help manage them. It is an important part of the way we do business.
Shell is the biggest marketer of bitumen in the world with an experienced sales team. We are also one of the largest hydrocarbon traders in the world. This scale and expertise enables us to offer a range of pricing mechanisms aligned to meet your commercial needs.
- Help you maintain your profitability and stabilise cash flows, by offering protection against price fluctuations or achieve a more predictable price.
- Help you differentiate your offer to your clients by being able to offer a range of pricing options.