Indian bitumen demand stymied by surging Covid cases

Bitumen demand for road construction projects in India is facing a slowdown as more restrictions are put in place to curb a surge in Covid-19 cases across the country.

‘We are waiting to see what the government decides about a lockdown, and we will not buy for now," said a key bitumen importer.

India has recorded over 200,000 new Covid-19 cases in the last 24 hours for the first time, continuing a surge in the infection rate which has risen more than twentyfold since early February.

Travel and business activity is being hit by mini-lockdowns across the country. Maharashtra, the worst affected state, has announced a lockdown until 1 May with exceptions only for essential services, exporters and transportation. But this has not prevented tens of thousands of migrant workers from fleeing the state, hurting manufacturing and construction companies.

The surge in Covid-19 cases in recent days has pushed bitumen buyers to the sidelines of the market as they see a slowdown in roadworks across the country.

The government has not announced a lockdown yet, but this is a possibility and would impact the market overall, the importer added.

"There is shortage of labour in many places as workers are not returning from hometowns," said another trader. Migrant workers have not returned to project sites following the recent Hindu festivities for Holi on 28 March.

"The government is also concerned about a full lockdown, given what happened last year with the migrant labourers," said an official at a key Indian refiner, referring to the social impact of the prolonged lockdown in 2020.

Demand has already been hit by an increase in stocks of bitumen from the Middle East, which has further pushed down import appetite.

But Indian refiners are so far shrugging off the building pressure on bitumen demand and have indicated that listed prices, due to be announced today, may see another round of hikes.

Listed prices in Mumbai touched 37,259 Indian rupees/t ($496.50/t) on 9 April, up by 59pc from 27 November 2020. The steady and continuous increase in the past several months has come in tandem with price increases in the Middle East and an uptick in feedstock vacuum bottom (VB) prices there.

The expected increase in listed prices today would reflect reduced production in Mumbai following a planned turnaround at state-controlled HPCL's refinery and efforts to maintain margins. The stable-to-firm trend in fob Middle East prices in the past month has supported these efforts by the Indian refiners.

Argus assessed bitumen prices at $295-300/t fob Bandar Abbas on 9 April, down by $2.50/t. This slight decline came after prices touched a more than two-year high on 1 April at $300/t.

By Mahua Chakravarty