Dear Much Asphalt Stakeholder
re: BITUMEN SUPPLY UPDATE – IMPORTED BITUMEN RISE AND FALL
Further to the previous correspondence dated 22 February 2022, we wish to confirm the current status of bitumen supply as well as a proposed Rise and Fall mechanism for the adjustment of the price changes that may occur.
BITUMEN SUPPLY:
The situation at SAPREF, Astron Refinery and Engen Refinery has not changed from the previous update. The supply situation from NATREF has deteriorated as loading slots for especially 70/100 pen grade bitumen have been reduced. In addition, the supply of specific grades, like 10/20 pen grade required, is
problematic as well as this grade of bitumen would either have to be imported from an external source, or produced by modifying softer bitumen through the Spraypave Converter located in Cape Town.
A bulk consignment of imported 50/70 pen grade bitumen has been offloaded recently into bulk storage tanks located in the Cape Town Harbour. However, initial tests on samples procured from this consignment shows possible problems with Mass Change and compatibility to modification with a polymer.
We are investigating possible cures to address these problems and in keeping to our commitment not to jeopardise quality, the decision is not to use this bitumen in either asphalt manufacturing (including as a straight penetration grade due to the out of specification Mass Change value) or binder and emulsion modification until we have found a solution.
Further bulk consignments of bitumen are planned as follows:
1. A 50/70 pen grade ship into Durban with an ETA of 10 April
2. A 50/70 pen grade ship into Durban with an ETA of 20 April
3. A 70/100 pen grade ship into Cape Town with an ETA of 15 May
4. A 70/100 pen grade ship into Durban with an ETA end of May
We once again wish to stress the importance of planning and the timeous placing of orders for final product supply as from the end of March and possibly for only a week or two post that, local SAPREF product will not be available until further notice.
PRICE CHANGE RECOVERY MECHANISM:
The necessity to import the majority of bitumen required to service the market is placing a significant financial – and operational burden on us as a supplier of bituminous materials. Significant investment has been made in increasing bulk storage capacity over the past number of years and more recently, some of
the bitumen traders have supplemented storage at or near import facilities.
It is envisaged that about 80% of bitumen used in South Africa will have to be procured from sources located elsewhere, and therefore the traditional mechanism used to apply the Rise and Fall in the bitumen price as a special product in the roads industry is not fair and just as local supply from local oil refiners will decrease significantly.
It is therefore our intention to use a bitumen price based on each bulk consignment which may be received from time to time. This price would allow for the imported price into a bulk storage facility either operated by ourselves or by a third party, it would allow for maintaining the temperature and/or the heating of the product as necessary and the eventual distribution there-of to the relevant manufacturing facilities. This price would remain valid until a next consignment is ordered and processed at which time a new price will be communicated.
The use of local bitumen (from end March the only local supply would be from NATREF) will be limited to a few manufacturing facilities where the adjustment of bituminous product prices will specifically be based on this source and communicated as such.
The source of bitumen supply would be clearly communicated on the relevant documents like quotes, for example, a price for asphalt from our Eerste River facility would be based on a Bitumen Variation Rate that may be described as “50/70 pen grade bitumen ex 10-04-2022 CT cargo”.
We once again wish to confirm our commitment to firstly quality product, and secondly, ensuring an excellent level of service to our customers.
Yours faithfully
AECI MUCH ASPHALT (PTY) LTD
BC GREYLING
Managing Director