It’s no secret that the bitumen market can be volatile. That’s why we offer customised solutions for managing pricing and operational risks.
Bitumen Pricing Risk
Asset owners of roads and other key consumers of bitumen are not only demanding better product performance and durability, but also greater consistency in bitumen costs. 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.
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 your 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 to help meet your commercial needs.
This could help you maintain your profitability and stabilise cash flows, by offering protection against price fluctuations or achieve a more predictable price. Contact a Shell representative today to discuss how we can help.
Bitumen Operational Risk
A changing landscape
Bitumen forms on average 5% of the mass and 33% – 50% of the cost of a typical asphalt mixture and continues to be an important raw material, yet the bitumen supply landscape is volatile. Almost all oil refineries used to produce bitumen, but the new generation of super complex refineries has the flexibility to stop bitumen production, depending on the availability of crude oil and the value returned by the end product.
As a result, a steady supply of bitumen can no longer be taken for granted. The operating environment is also changing significantly as project managers place longer-term contracts with tighter budgets, shorter operating windows and requirements for supply security.
Supply disruptions present a major challenge to maintaining operations and have the potential to cause significant delays. Supply disruption can be caused by product shortages or inconsistent quality and may result in cost overruns, penalties or even reputational damage to your organisation. With our global reach, extensive supply network, and stringent quality control procedures, Shell can help mitigate these risks and provide solutions designed to help you achieve operational continuity.
Consistent product quality
Stringent quality control procedures are designed to ensure that the product does not leave our facilities unless the quality is assured to meet specifications. The processes we follow also make sure that batch variation is minimised which saves our customers valuable time and avoids costs linked to rework.
Managing your risk
Working with our customers and industry partners, we have a range of customised solutions to meet your needs.
Long Term Supply Reliability
Our global reach and end-to-end supply chain gives us the leverage to provide you with reliable supply for long periods of time, giving you the confidence to commit to long-term projects. Shell can also offer flexible volume commitments and pricing mechanisms.
Our network of strategically located terminals provides safe and interruption-free operations. Benefits of our dedicated operations team include:
- Long opening hours
- Flexible logistics
- Multimodal logistics
More in about Shell Bitumen
We’re the partner of choice for customers from sectors ranging from airports to highways, roofing to Formula One™ tracks. We have an unrivalled track record in innovation and our specialty applications for coloured asphalt, energy efficiency, odour minimisation and underwater adhesives have set the industry standard.
Innovation is the lifeblood of Shell Bitumen. We’re committed to helping our customers meet their goals through cutting-edge technology, evidenced by continued investment in Research & Development (R&D) and a global network of technical experts. Our track record is evidenced by our product portfolio: we hold 49 patents in bitumen technologies alone.
Shell Bitumen puts the health and safety of workers, suppliers and customers at the top of its agenda. We have in place stringent policies, procedures and training to ensure safe delivery and handling.