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India’s massive demand for bitumen

First publishedin World Highways
January February 2016
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Asian Bitumen Conference
The quality of the bitumen being supplied is becoming as important as the quantities required and the logistics involved, according to the presentations at the Asian Bitumen Conference
India to lead the pack in bitumen consumption - Partha Pratim Basistha reports from the Asian Bitumen Conference

In the emerging global bitumen market, demand is expected to reach 122 million tonnes by 2018. Increasing road construction activities in the fast growing markets of India and China will be the main growth drivers of the bitumen market in Asia. This was the message delivered at the 10th Asian Bitumen Conference held in New Delhi, India from 23rd-24th November 2015.

The two-day event, organised by Conference Connection and supported by the Indian Ministry of Petroleum & Natural Gas attracted strong participation from Indian road contractors, bitumen producers, traders and key bitumen industry experts and speakers from India, US, Iran, UAE, Sri Lanka and Indonesia. The speakers discussed in detail the latest market trends and technical developments in the bitumen industry and offered insights about the new challenges and opportunities offered by India and other emerging Asian bitumen markets.

Delivering the inaugural address, Dharmendra Pradhan, the Indian Minister of State, Ministry of Petroleum & Natural Gas said, “India commands a road infrastructure of 3.3 million km, the second largest road network in the world, after the USA. Out of the total network, India’s National Highway network comprises 100,000km of State highways, while village and district roads occupy 2.8 million km. The National Highways cover 2% of the total network and carry the maximum share of freight and passenger traffic making them India’s lifeline. The government has kept the development of roads at a high priority, allocating more than 10% of total spending from 2012-17 to the road sector. The investments would be for setting up new networks and rehabilitating existing road networks. In such a scenario, bitumen will play a vital role towards planning and execution of road construction projects in India. Based on the projected demand from upcoming projects, India’s bitumen consumption will outpace production in the coming years.”

He said, “It is commendable, that to ensure longevity to road projects, Indian refiners have begun producing viscosity grade, polymer modified bitumen, emulsifiers and other value added bitumen.” However, the minister insisted, “Owing to diverse climatic conditions, it requires better understanding of bitumen supply and demand in the country by the Indian and foreign refiners and traders.”

In his welcome address, CEO, Hotcrete Infrastructure India Pvt, Ravikanth Reddy said, "During 2014-2015, total bitumen sales in India were 4.8 million tonnes. Based on the ambitious road development plan of the government, there will be an increase in demand of bitumen in India. Presently, 90% of India’s road requirement of bitumen is met by the local oil refiners while the rest is imported.”

Speaking at the conference, RK Pandey, Member Projects, National Highway Authority of India (NHAI) said, “There are colossal business opportunities for bitumen producers and suppliers in India, based on numerous road development projects being undertaken by NHAI under the prestigious National Highway Development Programme (NHDP) to strengthen India’s existing National Highway network handling the fast growing traffic on its two-lane and six-lane express ways.
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Dharmendra Pradhan, the Indian Minister of State
The inaugural lamp for the Asian Bitumen Conference was lit by Dharmendra Pradhan, the Indian Minister of State, Ministry of Petroleum & Natural Gas
Sharing details, he said, “Projects are being undertaken in seven phases by the NHDP. This involves development of the ‘Golden Quadrilateral Link’, connecting India’s four metropolitan cities: Mumbai, Delhi, Kolkata and Chennai, and involving a network of 7,000km. The second phase involving a network of 5,500km will connect the east and west and north and south of the country. Projects in the third, fourth, fifth and sixth phases will involve strengthening the feeder network connecting the GQ. Key projects include six-laning of the Golden Quadrilateral network, setting up of expressways on Delhi-Agra route, Delhi-Chandigarh in North India, Ahmedabad-Vadodara,Vadodara-Mumbai in Western India, and Bengaluru-Chennai in Southern India. Phase seven involves construction of flyovers, expressways. Further, under NHDP, there is the ‘Special Road Development Project’ for the North Eastern States of India and development of National Highways on India’s international boundaries, and road connectivity improvement initiat
ives to India’s non major ports.”  

Pandey insisted, “Since most of the newer Indian road projects are being developed on the ‘built operate and transfer’ contract model, the bitumen supplied should be of desired quality and have to deliver total lifecycle costs. This has been found short on many occasions.”    

Making a presentation on the outlook of the Indian bitumen market, RS Sisodia, general manager (consumer sales), Indian Oil Corporation, the state-owned oil refiner said, “Demand for bitumen in India is determined by budget allocation, duration of financial closure of projects and the release of funds. State government road projects contribute 55% of bitumen demand. The NHDP based on World Bank and Asian Development Bank financing contributes 40% of demand and central and industrial sectors contribute 3% of demand. Based on newer requirements for road projects with longer maintenance schedules, IOCL have upgraded its refineries to produce viscosity grade bitumen made through its six refineries.”

He said, “Viscosity 10 grade bitumen comprises 35% of demand in India, VG 30 comprises 60% of demand and VG 40 comprises 5% of demand. Based on duration and size of road projects taking place in India, there is a variation in demand across regions in bulk and in drums. However, with bigger road project packages being awarded in Western and Northern Region, demand for bitumen has gone up in bulk to 87. 2% in 2014-15, up from 81.4% during 2006-07 in the region.”   

Eurobitume widens membership net

Eurobitume, which supports and represents the bitumen industry in Europe, is now welcoming a broader range of organisations to its membership. Previously limited to producers and marketers of bitumen, the association is now open to polymer modified bitumen and emulsions producers, additive suppliers, hauliers and terminal operators, equipment suppliers, analysis and testing providers and educational institutions.  The move mirrors changes in the global bitumen market which sees bitumen travelling further, with the supply of bitumen becoming a more specialist affair. First to join as a result of the changes is Puma Energy, described as a ‘vertically integrated midstream and downstream oil group’. Italian oil group api has also rejoined Eurobitume.

“We are a relative newcomer to the European market,” says Alister Walgate, UK operations manager for Puma Energy. “Joining Eurobitume has not only given us invaluable access to a wealth of technical information, but also provides excellent opportunities to forge effective relationships with key European stakeholders, to participate in HSE and technical workshops and be actively involved in wider initiatives to promote bitumen”. 
Mentioning the Indian bitumen demand scenario and evolving demand trends, SK Srivastava, chief manager, Industrial Business Development, Bharat Petroleum Corporation, the state-owned refiner said, “Bitumen is produced in India through imported crude by BPCL, IOCL, the state-owned refiner, Hindustan Petroleum Corporation and private refiner Essar. Close to 6 million tonnes of bitumen is produced by the refineries per annum. The bulk of the volume is marketed for domestic consumption, chiefly for road and airport runway projects while the remaining is exported. With the expansion of road projects and the rehabilitation of the existing network, consumption of bitumen is projected to rise to 7 million tonnes from 2021-2022. Apart from demand being volume-based, it will be quality-based. This will provide scope for market development of value added bituminous products.”

He continued, “Based on the evolving demand trend of bitumen from India’s road construction projects, we have begun production of penetration grade bitumen in 2009. This was followed by production of viscosity grade bitumen by upgrading our refineries. Our next step will be to produce performance grade bitumen. As a recent initiative, we have begun production of polymer modified bitumen and natural rubber modified bitumen at our Kochi refinery at Kerala in South India.”

Mentioning the bitumen demand and supply situation in India, GS Gujral, director & chief executive officer, Bitumen Corporation of India said in his presentation,“Tenders for road projects are increasingly specifying use of VG-10, 30 and 40 grades of bitumen. With road projects becoming bigger, bulk constitutes 85% of demand, while 15% of demand is for drums. However, Indian refiners are unable to meet the demand of bitumen in drums due to logistical complexities of supply to job sites. This leaves room for imports, to supply bitumen in piecemeal volumes. However, importers have to carefully take note of the grades while importing the bitumen, as it has been found that there have been issues.”

Commenting on global sourcing of bitumen in India, Ravee Poddar, senior manager of Indian bitumen importing major, Tarang Exports said ,“Between 2010-2015 bitumen consumption in India has grown by 2.67%. Demand is projected to increase with large-scale development of road projects. Bitumen is exported to India from Iran, UAE, Greece, Thailand and Singapore. Demand is peak during summers and lean during winter months. Smaller road contractors have been facing issues to procure bitumen in lesser volumes. This is not usually met by the state and private refining companies in India. Imported bitumen would be a viable option, as the contractors can source them in smaller quantities to minimise inventory costs."

Shell targets Asia

Shell Bitumen has been targeting four of Asia’s fastest-growing economies – Indonesia, Thailand, Malaysia and the Philippines – with a tour by its general manager of bitumen technology, Professor John Read at the end of last year. Government ministers, airport operators and contractors received updates on the latest in bitumen technology, gathered for the updating of the Shell Bitumen Handbook, the sixth edition of which was published in February 2015.

“I’m delighted to have the opportunity of sharing our latest insights and best practices in bitumen technology with our key stakeholders and customers in this region,” said Read. “We believe they will benefit from this latest information in their ongoing infrastructure-building activities, which has been phenomenal, to say the least.” Asia Pacific now consumes more bitumen than any other region, with an annual percentage growth in demand of 3.7% between now and 2019, according to The Freedonia Group, which has just published its World Asphalt (Bitumen) report. Total global asphalt demand is predicted to grow at an annual rate of 2.8% over the same period.
Sharing his concern on pricing, Poddar said, “High pricing competition is a major issue in India, as Indian state and private refiners resort to heavy discounting of their products. This has been detrimental towards growth of imported bitumen in large volumes during peak seasons to bridge the supply gap. High import duty of 20% is also an issue, traders have to counter to procure imported bitumen.”   

Addressing the audience, commercial director, Pasargad Oil, Iran, Hamid Reza Rezaei, spoke in depth about Iran’s bitumen exports. Sigit Setiawan, marketing manager Bitumen, PT PERTAMINA (PERSERO), Indonesia elaborated on his country’s Bitumen Production and Development Outlook, while chairman & managing director, Bitumix (Private), Sri Lanka, Ashoka Siriwardena, offered a perspective on bitumen market developments and outlook in his country. He said, “Demand of bitumen is projected to increase to 200,000 million tonnes in Sri Lanka, up from 85,000 million tonnes in 2015 (up tol September), based on planned development of new expressways.”

The second day of the conference included similar sessions discussing the demand, supply, scenario and emerging opportunities and challenges in the Indian bitumen market. Factors such as preference being given to cement over bitumen in road construction remained pertinent issues to debate the merits, including the cost and sustainability, of each road material. Speakers also talked about value added specialty bitumen products, challenges faced by Indian road contractors and newer technologies in road building. Speakers for the second day session included, AKS Chauhan, COO, GR Infra Projects, and Prof PS Kandhal, associate director Emeritus, National Centre of Asphalt Technology, Auburn US.

The two-day event was supported by Tarang Exports (P) Ltd and Samroudhil General Trading FZE as Platinum Sponsors, and Bitumen Corporation (India) Pte ltd (BITCOL) and Renish Petrochem as Gold Sponsors.  Affiliate sponsors for the event were Akam Bitumen Company, Armina Energy General Trading and Black Gold Trading Company. The conference was a strategic alliance with Petrosil/Bitumart and supported by Rex Fuels Management Pvt Ltd and National Highways Builders Federation. The official media sponsors for the event were World Highways, Platts and World Oils.

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