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Viewpoint: India bitumen demand growth prospects mixed

  • : Oil products
  • 25/01/03

Prospects of India's 2025 bitumen consumption growth are mixed, as state governments' delayed disbursement of project funds are likely to persist and weigh on demand while the many incomplete projects could boost consumption.

India is a net bitumen importer and the biggest consumer of Middle East origin bitumen, especially from Iran. India's bitumen consumption had touched record highs in 2022 and 2023 and surpassed 8mn t/yr, despite prolonged payment delays, as importers had offered atypically longer credit terms to road contractors.

All importers and traders are "struggling with payment recovery", an Indian importer said. Many contractors are demanding credit as several state governments have not released funds, the importer added. "Demand is not bad, but it really depends on funding. Demand won't increase by a lot [next year], but it should be quite stable [to 2024]."

High inventory pressure forced importers to offer atypically bigger discounts to liquidate cargoes, which squeezed their profit margins, especially as import costs increased given a supply crunch in Iran. But there is no dearth of projects as many were delayed because of funding constrains, importers said.

Some state-controlled refiners anticipate consumption to grow next year, albeit marginally. Refiners were previously forced to offer larger discounts against listed values to attract more customers, which weighed on their profit margins this year. This could continue into 2025 would ultimately pressure refiners to reduce bitumen output and increase production of other higher valued oil products. Indian refiners typically produce around 5mn t/yr, which accounts for around 55-60pc of total bitumen consumption.

"We are only expecting a 3-4pc increase in demand on year as no new major road projects have been announced, so it is hard to see a larger growth," a source close to a state-refiner said. "But imports will increase if we reduce production, given growth will still be in [the] positive. So next year will not be that fantastic in comparison and there would not be any capacity augmentation for bitumen."

This indicates that the central government's expectation that Indian bitumen consumption will rise by 14pc on the year to 10mn t during the ongoing financial year ending March 2025 could be at risk.

Limited Middle East exports

Vacuum bottom feedstock supply has been erratic in Iran, and feedstock transportation from national refineries to private bitumen producers has also been delayed this year, which market participants expect to persist in the coming year. This will limit feedstock availability and in turn bitumen output, increasing export cost especially for higher priced VG40 grade, which is imported by India.

Tight supply has also increased congestions at the Bandar Abbas port, forcing vessel owners and importers to incur higher demurrage, increasing costs and weighing on import appetite. There are also fears that the new Trump administration may impose more sanctions and other political measures on Iran next year, further clouding the export outlook.

Iranian central bank's recent announcement to phase out the Nima foreign exchange platform has increased uncertainty on the rials' value against the US dollar as importers and exporters will now have to trade based on mutually agreed exchange rates, with the free market rate still depressed.

Meanwhile, Baghdad's recent directive to stop oil and other oil products from entering Iran, unless the exports are licensed by state-owned Somo, could also limit drummed bitumen exports as bitumen producers do not typically possess a Somo licence. Iraqi drums are generally transshipped out of Bandar Abbas.

The recent upgrade of Bahrain's state-owned Sitra refinery to 380,000 b/d from 267,000 b/d will primarily boost middle distillate and naphtha output, weighing on bitumen production.

Middle East cargoes are also typically exported to southeast and east Asia during low demand periods in India. Seaborne prices in Asia rose to multi-year highs in 2022 and import appetite for relatively cheaper Middle East-origin bulk cargoes increased, which continued in 2023. Appetite from Asia this year was mostly from China and Vietnam, as other buyers preferred Asia-origin cargoes because of compatible specifications and proximity.

"The Middle East-Asia arbitrage is closed, and we will see very little-to-no cargoes from the UAE to Asia," a southeast Asia-based trader said. This is because Middle East-origin cargo cfr prices are not likely to be competitive to Asian cargoes, with supply and loading constraints in Iran adding to the uncertainties.


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25/02/05

IMO mulls higher biofuel blend cargoes on Type I ships

IMO mulls higher biofuel blend cargoes on Type I ships

Singapore, 5 February (Argus) — The International Maritime Organization (IMO) is reviewing a proposal on the delivery of biofuel blends of up to 30pc on Type I barges, and is expected to approve this soon, according to several key maritime assessors and classification societies. The proposal, once approved by IMO, is expected to increase B30 bunkering globally as it would allow for the sale of B30 using the current available fleet of IMO Type I oil barges at any port, likely leading to a higher uptake of biofuel blends. B30 is a blend of 70pc very low-sulphur fuel oil (VLSFO) or high-sulphur fuel oil (HSFO) with 30pc used cooking oil methyl ester (Ucome). The draft circular on the carriage of blends of biofuels and MARPOL Annex I cargoes by conventional bunker ships was accepted by IMO's sub-committee on pollution prevention and response (PPR) during its 12th session from 27-31 January. The draft is expected to be approved at the next Marine Environment Protection Committee (MEPC) 83 meeting to be held from 7-11 April. Details of the 12th PPR meeting had not been published on IMO's website at the time of writing. The International Convention for the Prevention of Pollution from Ships (MARPOL) is an agreement that covers the prevention of pollution of the marine environment by ships. Annex I covers pollution by oil and oil products carried or operationally used by ships. Type I ships that deliver conventional bunker fuels can currently carry up to 25pc of biofuels under MARPOL Annex I, which has resulted in the adoption of the B24 blend in key ports across Asia, the Middle East and the Mediterranean region in the past few years. B24 consists of 24pc Ucome blended with 76pc fuel oil, which could be either VLSFO or HSFO. IMO has previously stated that Type II chemical tankers should be used for transporting biofuel blends with concentrations higher than 25pc. Shipowners have hence been waiting for the delivery of more Type II tankers, which are currently in limited supply at many ports. Market participants at the key port of Singapore are awaiting the impact of the decision in April. Enquiries for B30 have been surfacing in the past couple of months and refiners, traders, and shipowners are waiting for the outcome from MEPC 83, as well as subsequent decisions by the Maritime and Port Authority (MPA) of Singapore on how this will be implemented in the country, said several Singapore-based market participants. "[We] need to see if MPA agrees to follow IMO," said a key Singapore-based trader. MPA has not responded to a request for comment. The current push for higher biofuel blends comes as shipowners prepare to meet stricter compliance requirements set by IMO's Carbon Intensity Index and EU-led Emissions Trading Scheme and FuelEU Maritime. Demand for alternative marine fuels, especially biofuel blends and LNG, is expected to rise as shipowners look at reducing greenhouse gas (GHG) emissions across their fleets. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexican peso volatility persists despite tariff delay


25/02/04
25/02/04

Mexican peso volatility persists despite tariff delay

Mexico City, 4 February (Argus) — The Mexican peso remains volatile despite a bump from the last-minute deal postponing US President Donald Trump's threatened 25pc tariffs on Mexican imports, financial analysts said. The US agreed Monday to delay the tariffs for one month after discussions between Trump and Mexican President Claudia Sheinbaum. In return, Mexico pledged to deploy 10,000 National Guard troops to its northern border to combat drug trafficking, with a focus on fentanyl. The peso initially reacted positively to the news, strengthening by nearly 3pc late Monday after the agreement was announced. Still, today the Mexican peso weakened 0.4pc to Ps20.5 to the dollar by the end of trading, according to data from Mexico's Central Bank (Banxico). The peso has depreciated 16.6pc against the dollar from a year ago, according to Banxico data. The currency will remain volatile until there is greater clarity on whether tariffs will ultimately be imposed and at what level, BBVA Mexico bank analysts said in a note. If the US proceeds with a 25pc tariff, the peso could weaken to Ps24/$1, pushing Mexico's economy into a 1.5pc contraction this year, according to the bank. A lower 10pc tariff would be more manageable, BBVA Mexico added, as peso depreciation would offset some cost increases for US importers. In that scenario, Mexico's economy could still grow by 1pc in 2025. "Markets have debated whether to take Trump's policy promises seriously but not literally, or both seriously and literally," Barclays analysts wrote in a note to investors. Barclays also noted that the US sees itself as having the upper hand in any trade war, as a far greater share of Canadian and Mexican exports depend on US demand than vice versa. Mexico's state-owned oil company Pemex typically benefits from peso depreciation because of its US dollar-denominated crude exports, which help offset higher fuel import costs. "Pemex's revenues are tied to international oil prices, providing a natural hedge," the company said in its latest earnings report. However, analysts warned that Pemex's shift toward domestic refining over exports could reduce this buffer, leaving the company more vulnerable to foreign exchange swings, particularly as it carries a large dollar-denominated debt load. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Engie converts Chile diesel plant to renewables


25/02/04
25/02/04

Engie converts Chile diesel plant to renewables

Santiago, 4 February (Argus) — French utility Engie has started commercial operations at its 68MW Tamaya battery energy storage system (BESS) on the site of its former diesel-fired power plant near Tocopilla in northern Chile's Antofagasta region. BESS Tamaya will store electricity generated by the 114MW Tamaya photovoltaic (PV) plant on the same site, which began operations in February 2022. The company is "repurposing the site to give it a second life and continue contributing to the local economy," said Engie Chile chief executive Rosaline Corinthien. BESS Tamaya consists of 152 lithium battery containers with a storage capacity of 418MWh. It will be able to supply 50,800 homes over five hours of peak demand. Engie is also constructing the 116MW Tocopilla BESS operation at its former Tocopilla coal and fuel oil-fired power complex in the same region. It disconnected the complex from the grid in September 2023. Engie is the fourth-largest generator in Chile with 2.6GW of installed capacity. Its BESS portfolio consists of 2GWh in operation and construction. The conversion of fossil fuel-fired plants is part of Chile's decarbonization plan to ensure a "just" energy transition, providing new sustainable economic activity for communities. Since 2019, Chile has withdrawn 11 coal plants for a combined 1.7GW and is committed to closing the remaining 17 coal plants by 2040. By Emily Russell Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US delays Mexico tariffs by a month: Update


25/02/03
25/02/03

US delays Mexico tariffs by a month: Update

Adds comments from press conference, White House response, historic context. Mexico City, 3 February (Argus) — The US has agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month to allow more time for negotiations, President Claudia Sheinbaum said today. Under an agreement with the US, Mexico will immediately reinforce its border with the US with 10,000 national guard troops to limit drug trafficking into the US, with a specific focus on fentanyl, Sheinbaum posted on social media platform X. The US pledged to take stronger action to curb the flow of high-powered firearms into Mexico, she said. The pause will allow "Mexico time to demonstrate good results for the US people and our people" on key security concerns, Sheinbaum said. US president Donald Trump confirmed the tariff delay in a social media post, saying there would be negotiations in the coming weeks with Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick. The White House praised Mexico's willingness to respond positively to the tariff threats, while characterizing the Canadian response as [a] misunderstanding. "The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council director Kevin Hassett said in a broadcast interview. Canada had "misunderstood the plain language of the executive order and they're interpreting it as a trade war." Trump said this morning that he "looks forward to negotiations" with Sheinbaum to reach a deal between the countries. He is also talking to Canadian premier Justin Trudeau later today. The announcements today do not address Trump's complaints of a trade deficit with Mexico, which Sheinbaum said during a press conference today the US misinterprets as a negative. Both the US and Mexico benefit from the region becoming more competitive, she said. Mexico will also keep its retaliatory tariffs on the table: "We will save Plan B for later, if necessary," Sheinbaum said. The current tensions are similar to those from 2019, when Trump threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. If the tariffs were implemented, it would disrupt the energy trade between the US and Mexico. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Mexico also imports much of its road fuels and LPG from the US. But the country is unlikely to hit these goods with retaliatory tariffs, according to market sources. By Antonio Gozain and Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

European products markets open higher on US tariffs


25/02/03
25/02/03

European products markets open higher on US tariffs

London, 3 February (Argus) — European light and middle distillate markets opened higher today after US tariffs against China, Mexico and Canada were announced over the weekend, but market participants reacted cautiously to the move. US president Donald Trump on 1 February slapped tariffs of 10pc on Canadian energy imports, which account for a significant share of foreign crude and products supply into the US. The tariff rate against Canada stood in contrast to the 25pc tariff applied to Mexico, which may be designed to mitigate the inflationary effect of costlier Canadian crude and products imports in the US market. Eurobob non-oxy gasoline barges were trading at a volume-weighted average of $728/t at 13:40 GMT, up from $715/t since the 31 January close, while underlying Ice February gasoil futures — the futures value against which diesel and jet cargoes are traded — was higher at $727/t, up from $711.25/t. Brent crude values were just 14¢/bl higher, as product cracks firmed by 19.1pc and 8.6pc to $10.37/bl and $20.43/bl against Brent futures for non-oxy barges and Ice gasoil futures, respectively. Any Canadian product sales into the US would see tariffs passed onto the buyer, according to one source with knowledge of the matter, adding they were waiting to see how Canada otherwise responds to the US tariffs. Canadian refiners could also start sending their product to west Africa or Latin America, another source close to the matter told Argus last week. This ‘wait-and-see' approach was echoed by one Mideast Gulf gasoline trader, while two European analysts said the desired policy outcome of rebalancing trade between the US and Canada was not straightforward, and may make Canadian products imports more affordable as the Canadian dollar depreciates. The US may be better prepared for a gasoline supply shock as a result of seasonal stockpiling, one analyst said, but the US Atlantic Coast has a more significant gasoline supply shortage than Canada if gasoline output were to remain in the domestic market north of the border, another said. In a sign of concerns over US Atlantic Coast diesel tightness, the Sebarok Spirit LR2 appeared to have been booked to deliver a mixed cargo of 10ppm diesel and gasoline from the Port of Antwerp to New York by 15 February, according to Kpler tracking data. These type of voyages "never happen", one analyst said, with Europe structurally short of diesel and the ARA hub a reliable diesel buyer of last resort. The vessel was still anchored at the Port of Antwerp today. In the event of lower Canadian crude deliveries to US refineries, US product cracks could strengthen, one analyst said, but added a halt in supplies of Western Canadian Select (WCS) to US refineries was unlikely. A strengthening in product cracks could exacerbate a seasonal improvement in Rbob gasoline premiums ahead of the summer driving season, the source said, while transatlantic diesel arbitrage economics could remain shut firmly for longer — closing off a key supplier from the European diesel market. It was not immediately clear how product flows from Canada to the US were otherwise impacted today, as most product exports into the US are made via pipeline. No new gasoline or diesel cargoes were recorded loading at Canadian ports signalling US delivery by Kpler today. Two vessels carrying clean products from Valero's 265,000 b/d Jean Gaulin refinery, Quebec, were sitting offshore northeast US signalling to discharge volume at New Haven, Connecticut on 5-6 February. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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