India's bitumen consumption hit a record high in 2023, despite issues with road paving activities because of prolonged delays in disbursement of project funds by state governments.
Consumption rose to 8.87mn t in 2023, up by over 10pc on the year from 8.05mn t in 2022, preliminary oil ministry data show. Consumption was at 794,000t in December, up by 17pc from 679,000t in November and by 11pc from 717,000t in December 2022.
Despite issues with payments, importers actively sold cargoes to road contractors in 2023, albeit on atypically longer credit terms and with higher-than-normal price discounts, market participants said. An acceleration in national highway projects provided support to consumption last year.
Indian importers were forced to sell Middle East-origin seaborne stocks at below purchase cost to attract buyers, as many contractors were strapped for cash. State governments diverted infrastructure funds to other subsidy schemes, leading to prolonged payment delays for the second consecutive year, some market participants told Argus.
Bitumen imports in 2023 were also on track to reach their highest levels since 2012, with imports at 3.05mn t as of November 2023, up by 17pc from 2.6mn t in 2022, preliminary data show.
But many importers noted that consistent weakness in domestic prices, owing to the fall in seaborne values, and lack of funds made it difficult for them to realise acceptable profit margins. Importers had initially anticipated robust demand in 2023 and pre-booked larger quantities, but sales were below expectations and kept inventories at higher levels.
State-controlled refiners in Mumbai decreased their listed VG10, VG30 and VG40 bulk and drummed bitumen prices for four consecutive fortnights starting 1 November. VG10 and V30 prices ex-Mumbai declined by 8,280 rupees/t ($99.55/t) over the year from 1 January-16 December 2023, against a net increase of Rs7,145/t over a similar period in 2022, as per Argus calculations.
Importers and sources close to India's state-controlled refiners expect consumption to mostly remain unchanged on the year in 2024 because of continuing payment delays.
