Asia’s Bitumen Shift: Trade Flows, Freight, and Future Demand

Irina: Hello, and welcome to our podcast, "The Asphalt Story." Today, we want to give an overview of the Asian markets. I'm Irina Vinogradova, Senior Manager for Argus Consulting Services. And with me today, I have Claire Ng, Senior Reporter of products, Asia, and Chloe Chu, Senior Reporter from the same team, as well as Elliot Chan, Senior Consultant, Asia. So Claire, let me start with you, actually. It looks like the bitumen exports from China have been gaining a firmer foothold in Asia Pacific market in 2025. Could you share a bit more on this?

Claire: Yes, absolutely. Chinese exports have been on an uptrend, and we see this likely extending to 2026 as well. Customs data from China shows that the country exported around 700,000 tons of bitumen last year. And this is an increase of around 50% compared to 2024.

Irina: That's quite a sizable increase in exports. What are some driving factors for this?

Claire: Well, there are several factors at play here. One of which includes high output from Chambroad's refinery in Hainan, which has a production capacity of about 2 million tons per year. Chambroad has been able to export more because they enjoy lower production costs under a zero-tariff policy in Hainan's free trade port. Chambroad alone exported around 265,000 tons of bitumen last year. And this is a huge jump from just 40,000 tons in 2024. To put this in another perspective, Chambroad's exports made up about 37% of China's total exports in 2025. So that's quite a lot of volume from Chambroad alone.

Another factor for higher export volumes would be a rising number of Chinese refiners joining the export market. For instance, state-owned refiner PetroChina's Jieyang refinery and private sector producer Ningbo Bohui have also started exporting in 2025.

Finally, a third factor would be strong demand from Vietnam. There were more world projects last year to make up for a shortfall in 2024 when funding issues were more prevalent. This naturally translated to more import demand, and Chinese exporters were able to meet that.

Irina: Right, it looks like Vietnam takes quite a lot of volume from China. Are there any other key consumers for Chinese exports?

Claire: Yes, you're right. Vietnam remains the largest destination for Chinese bitumen exports mainly because of its geographical proximity and competitive freight rates. Around 220,000 tons of bitumen was exported to Vietnam in 2025, which works out to about 32% of China's total export volumes. That's more than double that of the 100,000 tons exported in 2024. The second largest destination was Malaysia, but volumes were much lower at around 98,000 tons.

One interesting trend though would be exports to Thailand. China exported about 79,000 tons to Thailand in 2025 compared to just 8,000 tons in 2024. That's around a 900% increase. Most of this can be attributed to lower domestic output because of a weak petrochemical sector, as well as firm domestic demand. If similar market conditions persist in 2026, we may likely see similar export volumes to Thailand again. But beyond Southeast Asia, Chinese exports can also be seen headed to Australia and New Zealand. There's also been shipments to West Africa as well, though this is still rare because of expensive freight rates.

Irina: Right, it looks like traditional exporting origins such as Singapore and Thailand have some serious competition from China now. That's also likely putting pressure on seaborne offer prices in the region. Could you possibly comment about that?

Claire: Yes, you're right, you're right. Most South China exporters pack their prices against Argus FOB Singapore ABX1 prices, and we have heard buyers turn down traditional sources in favor of Chinese bitumen because of their cheaper prices. Overall, we have been noticing that Chinese exports have become more consistent since last year, so we've decided to respond to these market shifts by launching an FOB South China price assessment. This assessment will be updated weekly according to deals, bids, and offers that we hear from the market. We are expecting this new price assessment to launch in early March, so definitely keep an eye out for this in our weekly reports.

Irina: All right, Claire, thank you so, so much. It's a very exciting announcement indeed, so we will be all keeping an eye on it. Now, Chloe, you are covering the Middle Eastern market and, as we all know, the volumes are quite important for Asia as well, so I just wanted to ask you a couple of questions. There has been increased scrutiny on Iranian exports across the global energy sector, and bitumen is no exception. Could you maybe walk us through how sanctions have hampered trade in the Middle East?

Chloe: Well, the United States sanctions and ongoing tensions haven't shut down Iran's bitumen trade, but they've certainly reshaped it. Now, we know that Iran is a major producer of bitumen and even though sanctions haven't completely stopped the trade, they've made it significantly more difficult and far riskier. While there is still demand from countries across Asia, Africa, and the Middle East...I mean, they still need bitumen for infrastructure projects, right? Roads don't pause because of geopolitics. But what we see is that the key change here is buyer behavior. Buyer behavior has changed and importers are far more cautious now. They don't want to risk their access to banking, insurance, and international shipping as well. And as a result, some buyers have decided to step away entirely while others push for heavy discounts, and we're also seeing some of them turn to alternative suppliers.

So just to give you an example, let's take India. They are traditionally a key buyer of Iranian bitumen, but importers I've spoken to so far say that despite the healthy demand, there's actually a shortage of available cargoes. So they are struggling to bring material in due to factors like shipping delays, unreliable sellers, and also ongoing communication issues. On a whole, what we see is that they are operating in a market that has become far more volatile and opaque. So these importers don't know how long loading will actually take at the port and when their cargoes will arrive, and this uncertainty has made it a lot harder to secure prompt cargoes needed for any of the time-sensitive projects. And this has been a very key driver of higher prices since the start of the year. And on top of that, I mean, as we all know from the news, there's also been internet and communication blackouts in Iran because of widespread protests and unrest. So this means that Indian importers or any other interested buyer, in fact, they simply can't reach the exporters to negotiate or conclude any deals at all.

Irina: Indeed. And you briefly touched on shipping delays earlier. Could you tell us more about that and how that has impacted trade so far?

Chloe: Yes, of course. We've seen sanctions increasingly target vessels and shipping companies, particularly the so-called shadow fleets, that are used to move Iranian oil products, and this has become a major pressure point for the market. A direct consequence has been longer shipping routes, higher freight costs and once again, as I mentioned earlier, a lack of transparency. So if you think about it, moving products from just point A to point B, what used to be a routine task, it's no longer as straightforward, and this is already playing out in India. So in the first quarter, which is where we are now, this is typically when bitumen consumption picks up after the winter. But this year, we're seeing that trade has been a lot slower despite there being underlying demand. So many traders are reluctant to fix vessels or conclude deals because of the uncertainty. They don't know whether their cargos will even arrive actually. So earlier I talked about delays, but there are also issues of the cargos even getting to India.

And geopolitics, of course, adds an additional layer of risk. So whenever tensions rise between any country, whether through military incidents or stalled nuclear negotiations, the market will price all these risks in. So insurance premiums increase, freight rates rise, and volatility across oil markets intensifies.

That said, both market participants don't expect trade to stop entirely, and while imports of Iranian bulk bitumen may slow in the near term, importers are saying that there are still workarounds. So one option is trans shipping cargos via the UAE and this allows trade to continue, but at a higher cost. So what we've gathered so far is that vessel owners are saying that freight is expected to rise by about $30 to $40 per ton compared with a direct voyage. This is simply due to the additional discharge and reloading in the UAE, and import costs will inevitably increase as a result as well. However, this route would also become unviable if the Indian government were to halt trade with Iran because that would mean that importers are required to provide certificates of origin to the customs authorities, and that's a risk some importers are already watching very closely. It remains to be seen how India will respond and how this would play out, so whether it makes business sense to continue trying to do this or if they should just turn to Indian refineries for supply instead.

Irina: Thank you so much, Chloe. And with this it just makes our job ever more harder on asphalt analytics to evaluate the markets and what is going to be the impact going forward. Elliot, since you are our regional lead for asphalt analytics, I just wanted to ask you some questions about how you see Asia Pacific market fared in the last couple of years and what is the future holding for us. So let's start with the past couple of years. Argus estimated that asphalt production in Asia Pacific declined. Why was that the case?

Elliot: Yes, thank you for that question. It's not usual for asphalt production in the region to decline because it is home to the world's largest producer of asphalt, China. So in 2024 production is estimated to have fallen by 4.5% relative to 2023, with the largest decline occurring in northeast Asia due to developments in China and Japan. So in China, both major state-owned refiners and smaller independent refineries produce asphalt, but independent refiners, commonly known as teapots, traditionally process heavy crude oils with higher asphalt use. These independent refiners have faced reduced crude import quotas. Instead the quotas have favored large integrated refining petchem complexes and restricted feedstock access for standalone independent refiners thereby reducing asphalt output. Meanwhile, in Japan, production also fell, but in response to historical downward trends in asphalt consumption. Between 2021 and 2023 asphalt consumption declined by approximately 21.7%. And given that Japan's production is closely linked to domestic infrastructure activity rather than exports this sustained decline in consumption is expected to lower output in 2024 and continue on to 2025 and even beyond.

Irina: And how is this tying together with the increased exports from China? Maybe can we talk about the demand in China and how the 15th five-year plan affected that?

Elliot: Yes, thank you. So the 15th five-year plan it marks a major shift from the 14th five-year plan in that it places a stronger emphasis on advanced manufacturing and digital infrastructure. Notably, the plan does not include major new highway expansion announcements, and this is a clear departure from the 14th which focused on building a modern integrated transport system supported by highway mega projects. As a result, China's asphalt demand growth is expected to slow resulting in higher export volumes. But this is not to say that road construction will cease in China. They have announced the rural road upgrade plan which plans to build and maintain 600,000 kilometers of rural roads and ensure they are kept in good condition, particularly in West China and Northeast China. Additional projects are being planned in Xinjiang and Western China, although these are smaller in scale and reflect the shift towards more targeted infrastructure investments. Consequently, China's asphalt demand is still expected to grow modestly at around 0.8% per year between 2024 to 2029.

Irina: In South Asia, India's asphalt consumption fell after record highs in 2023. Is Indian demand losing momentum?

Elliot: So India remains the largest asphalt consumer in South Asia. It is the largest consumer by far, and its record high consumption was driven by accelerated infrastructure spending ahead of the 2024 general elections. After this peak, demand fell by 3.8 %, reaching 8.4 million tons. The decline was due to project delays during the election period between April and June 2024, when tendering was slowed and election-related spending constrained state budgets resulting in delayed project awards and weaker highway construction activity. Despite this temporary slowdown, India's highway construction targets remain robust. For the financial year 2025 to 2026, the government has set a target of 10,000 kilometers of new highways, which is lower than the peak of 13,800 kilometers in the previous financial year. Despite this temporary slowdown, India's highway construction targets remain robust. For the financial year 2025-2026, the government has set a target of 10,000 kilometers, which is lower than the peak of 13,800 kilometers in 2023-2024, but this reflects continued commitment to expansion. As of December 2024, only 19,200 kilometers of the 34,800 kilometers planned under phase one of the national highway scheme had been completed, indicating substantial construction activity all the way through to FY 2028. In short, despite the dip in 2024, India's asphalt demand is still expected to rise over the forecast period.

Irina: Moving to Southeast Asia what happened with Indonesia being the largest consumer, how that got changed?

Elliot: So that has been quite a surprise because Indonesia historically has been a major asphalt consumer, but in 2024, Thailand overtook Indonesia. Thailand's consumption increased by 6.9% between 2023- 2024, but the ranking shift was driven primarily by a sharp fall in Indonesia's demand. In 2024, Indonesia's asphalt consumption dropped by 16.2% to about 1.03 million tons per year. This is mainly because funding for road paving projects was reduced as government expenditure shifted towards general election activities, and policy priorities such as student food programs were prioritized instead. This decline is not expected to be temporary because under the new government led by President Prabowo installed in late 2024, spending priorities have shifted even further towards social welfare programs, including school meal initiatives and free health checkups, largely at the expense of infrastructure investment. As a result Argus estimates that Indonesia's asphalt consumption will fall by an additional 17.3% in 2025, reducing demand to approximately 850,000 tons per year, placing Indonesia in third place in Southeast Asia behind Malaysia, which does mark an incredible fall from Indonesia being the largest consumer to being the third place in 2025.

Irina: Continuing the trend of declining consumption in Asian markets, can we talk about Australasia? Australia saw a decline in consumption in 2024-2025 what caused such a drop?

Elliot: So traditionally, we wouldn't be spending so much time speaking about the Australian markets because it is quite a mature market that does not shift very much. Therefore, in 2024, a 13% decline is very notable. Market participants have indicated that many states were still experiencing the economic after-effects of the pandemic leading governments to redirect funding towards health care and business support rather than road construction and maintenance. In November 2023, the Australian Federal Government announced that it would withdraw approximately AU$ 7 billion in funding from 50 infrastructure projects nationwide. This followed a government review that found several projects were unlikely to be delivered or did not align with policy priorities, which indicates a massive shift in policy. But looking ahead, asphalt demand in Australia is expected to recover.

In 2025, the re-elected Albanese government announced AU$17.1 billion in funding for new and existing road and rail projects under the 2025- 2026 infrastructure investment program. This funding supports planning, construction, and project delivery, and therefore is expected to lift asphalt demand by 4.4% in 2025. So, in summary, 2024 has not been a great year for demand in Asia Pacific. However, we do see signs that 2025 has shown a recovery of demand in the market, and Argus expects that there will still be growth in the forecast period driven by policy decisions in South Asia, Australia, and other parts of Southeast Asia.

Irina: Thank you, Claire, Chloe, and Elliot. Please check our weekly Argus Bitumen reports for global coverage, Argus Bitumen Asia Daily for Asian coverage, and for the outlook, Argus Asphalt Quarterly Analytics. We have recently published the Asian part of the asphalt analytics, so please take a look and keep an eye on our Chinese new assessment. Thank you, and we'll be back soon with future episodes.