Bitumen Consumption Hits Decade-High as Road Construction Surges

Key Highlights

1. Current Prices: VG40 is priced at ₹35,500/MT in Mundra and ₹44,332/MT in Chennai; VG30 is priced at ₹35,000/MT in Mundra and ₹42,012/MT in Chennai. Bitumen emulsion prices range from ₹31,900/MT to ₹33,400/MT.
2. Demand Surge: FY24 consumption hit 8.8 MMT, a 10% YoY increase, driven by MoRTH’s construction of 12,349 km of national highways.
3. Heavy Imports: Over 40% of India's bitumen is imported, costing $1.3 billion in FY24, an 8% YoY rise.
4. Industry Trends: Cement use is growing as an alternative to bitumen in road construction, signaling potential shifts in demand dynamics.

Bitumen Prices: Regional Variations and Trends

• The current prices for bitumen in India vary based on grade and location. Roadgrip Bitumen (VG40) is priced at ₹35,500/MT in Mundra, while VG30 is slightly lower at ₹35,000/MT. 
• In Chennai, Refinery Bitumen (VG30) is priced at ₹42,012/MT, and VG40 at ₹44,332/MT. 
• For bitumen emulsions, Roadgrip Bitumen Emulsion (RS 1) in Pithampur is priced at ₹31,900/MT, and Roadgrip Bitumen Emulsion (SS 1) in Mathura is priced at ₹33,400/MT.

Bitumen Demand and Supply: Imports and Challenges in Domestic Supply

• In FY24, bitumen consumption in India reached 8.8 million metric tonnes (MMT), marking a 10% increase compared to FY23. Over the last five years, the average annual consumption stood at 7.7 MMT, up from 5.94 MMT between 2014-15 and 2018-19. 
• Despite the increase in domestic consumption, more than 40% of bitumen is imported, with India spending $1.3 billion on bitumen imports in FY24, an 8% rise from the previous year. 
• Regionally, Western India was the largest consumer of bitumen, while Eastern India had the smallest consumption.
• The surge in bitumen demand is largely driven by ongoing road construction activities. 
• The Ministry of Road Transport and Highways (MoRTH) constructed 12,349 km of national highways in FY24, the second-highest ever, compared to 10,331 km in FY23. 
• Bitumen represents about 4% of the total domestic consumption of refined products and is mainly used for road construction, although cement is also increasingly being used for concrete roads.

Bitumen News: Shifting Preferences and Industry Updates

• Mukesh Ambani's Reliance Industries Ltd has signed a deal to import crude oil worth $12-13 billion a year from Russia's Rosneft for 10 years, sources said. Russian state oil firm Rosneft will supply up to 500,000 barrels per day (25 million tonne a year) of crude oil to Reliance, they said. 
• Vladimir Putin can look forward to a warmer winter. Ahead of the Russian president’s planned visit to India, Reliance Industries, signed a 10-year agreement to buy cut-price crude worth around $13 billion annually from Rosneft, Reuters reported on Thursday, citing three unnamed sources. 
• ONGC's production trend is beginning to turn after eight straight years of fall as a key new field in KG Basin ramps up and the old Mumbai High asset arrests decline.
• ONGC's crude production rose 3% year-on-year in November to 53,804 tonnes per day (tpd) and the output growth so far in December has accelerated to 4.2% to 54,535 tpd, according to people with knowledge of the matter.

Expert Opinion: Road Construction and Market Outlook

• The Ministry of Road Transport and Highways (MoRTH) constructed 12,349 km of national highways in 2023-24, reflecting an increase in demand for bitumen. Despite this rise in domestic consumption, over 40% of bitumen is imported, with India spending $1.3 billion on bitumen imports in FY24, an 8% increase from the previous year. 
• Market expectations suggest continued growth in bitumen consumption, with road construction remaining a key driver, although the use of cement for concrete roads is also increasing