India's bitumen consumption rose by about 4pc on the year in 2025 because of accelerating central government-linked projects, largely in line with expectations of a modest increase, most market participants said.
Consumption rose to 8.74mn t in 2025, up from 8.43mn t in 2024, preliminary oil ministry data show. But this was still lower than the record high of 8.8mn t achieved in 2023.
The growth was in line with expectations at 4-4.5pc. A market participant close to a state-controlled refiner had been optimistic that the increase could reach 5-6pc. Overall, the volume increase was not that significant, they said.
Profit margins shrank in 2025 and were below 2024 levels, despite an increase in consumption, many importers said.
Profit margins were squeezed because importers increased their purchases in anticipation of higher demand post-monsoon in 2025, but later struggled to sell in the domestic market because of lower-than-expected demand due to an extended monsoon season, an importer based in the west coast of India said.
State-controlled refiners also offered steeper-than-expected discounts. These state refiners sold aggressively and importers were unable to compete, the importer added.
Importers and state-controlled refiners typically offer discounts, which are sometimes unusually steep, to drive sales. The early onset and late withdrawal of the monsoon season in 2025 pushed many importers to slash their domestic selling prices or offer larger discounts to liquidate inventories and create ullage. Demand also slowed intermittently because of prolonged delays in the disbursement of project funds by some state governments.
Demand in 2026 is expected to grow at the same pace as 2025 but will not accelerate, because the central government is unlikely to release new large-scale projects, market participants said. Prolonged delays in the disbursement of project funds by state governments may also provide headwinds for consumption, they added.
Consumption growth in 2026 will be mostly driven by maintenance demand rather than new projects because the government does not have enough funds to release more new projects relative to 2025, another market participant close to a state-controlled refiner said.
Some projects have yet to be completed and there is pent-up demand, especially from the national highway side, an east-coast India-based importer said.
But imports will find support because bitumen production in India is unlikely to increase, with no new capacity augmentations in the pipeline and refineries increasingly opting to install residue upgradation units.
