Fluctuations Persist in Bitumen Prices Amid Geopolitical Tensions and Supply Chain Challenges

Key Takeaways

• Price Fluctuations Continue: Bitumen prices in India remain volatile, with VG40 at INR 50,602–51,602/MT and VG30 at INR 47,752/MT in the northern region.
• Uncertain Demand Growth: The government projects 14% demand growth for 2025, but market experts expect only 3-4%, mainly from existing infrastructure projects.
• Iranian Supply Risks: Supply from Iran is under pressure due to new export restrictions, logistical delays, and uncertainty over forex valuation changes.
• Shipping Costs Rising: Increased congestion at key ports like Bandar Abbas is pushing up freight costs, adding to importers’ financial strain.
• Refinery Prioritization Shift: Middle Eastern refiners are focusing on higher-margin petroleum products over bitumen, leading to potential supply shortages in the region.

Petroleum Price: Bitumen Prices Fluctuating 

• Bitumen prices continue to fluctuate amid geopolitical tensions and supply chain challenges. 
• In the northern region, refinery VG40 prices range from INR 50,602 – 51,602 per MT in Panipat and Mathura, while VG30 is priced around INR 47,752 per MT. 
• Mathura also sees Roadgrip VG30 and VG40 bulk bitumen at INR 42,500 and INR 43,700 per MT, respectively. 
• Bitumen emulsions in Mathura are priced between INR 33,810 – 38,810 per MT, varying by grade and packaging.

Petroleum Demand and Supply: Middle East Supply Concerns

• India's bitumen demand is expected to see mixed growth in 2025 due to delayed government project funding, despite ongoing infrastructure requirements.
• India remains a net importer, heavily reliant on Middle Eastern supply, particularly from Iran. Domestic refiners produce around 5mn ton/yr, covering 55-60% of consumption.
• Iranian bitumen supply faces disruptions due to feedstock transportation delays and potential geopolitical sanctions under the new U.S. administration.
• Global bitumen prices have been under pressure due to supply chain constraints and increased demand from China and Vietnam.
• Middle Eastern exports to Asia have slowed, as arbitrage has closed due to high costs and logistical challenges.
• Indian road contractors continue to face delayed payments, forcing importers to offer longer credit terms, squeezing profit margins.

Petroleum News: Geopolitical Tensions and Supply Chain Issues

• The Indian government’s projection of a 14% increase in bitumen demand for FY 2025 may not materialize due to lack of major new infrastructure projects.
• Bahrain’s Sitra refinery upgrade to 380,000 b/d is expected to prioritize middle distillates over bitumen production, affecting regional supply.
• Iraq has imposed new restrictions on oil and bitumen exports to Iran, potentially limiting drummed bitumen availability from Bandar Abbas.
• Iran’s central bank has phased out the Nima forex platform, increasing uncertainty over rial valuation and impacting pricing for importers.
• Shipping costs have risen due to congestion at key ports such as Bandar Abbas, leading to higher demurrage costs for importers.

Expert Opinion: Moderate Growth Expected

• Industry sources expect a marginal 3-4% growth in bitumen demand for 2025, as most consumption will stem from ongoing projects rather than new initiatives. The risk of tightening supply from Iran could push Indian refiners to reduce bitumen output in favor of more profitable oil products.
• High inventory pressure is forcing refiners and importers to offer discounts, though margins remain squeezed.
• Despite uncertainties, India’s demand for bulk bitumen imports may increase if domestic production declines further.
• Concerns over potential U.S. sanctions on Iran could further disrupt Middle Eastern bitumen exports, impacting Indian supply stability.