The outlook for UK road construction and bitumen demand is downbeat, with no clear prospects of a recovery from years of weakening consumption ahead of the government's budget announcement on 30 October.
Construction sector buyers and refinery suppliers at the recent Highways UK conference said road and highway spending, and resulting bitumen demand, is likely to remain slow, with the government unlikely to commit larger sums as it looks to tackle a £22bn ($28.6bn) "black hole" in government finances it says was left behind by the previous administration.
A European construction firm with a UK project portfolio said a number of major highway projects it had expected to begin in 2025 will probably be postponed to 2026, as a start next year would have required funding to be allocated to them well before now.
A firm with extensive UK project work said its activity and volumes had dropped this year but that it was hoping for no further falls in 2025.
Some of the funds due to have been switched from the UK's ambitious high-speed rail (HS2) programme into road building could end up plugging the financial gap. The previous goverment in November last year pledged £8.3bn from a massively curtailed HS2 would be spent on resurfacing more than 5,000 miles (8,000km) of roads over an 11-year period.
Some market participants pointed to the government's commitment to a major housebuilding programme as something that could, if public and private funds are forthcoming, generate a significant boost to bitumen demand for associated paving and roofing work.
Fixing potholes
Additional demand could be generated from pothole repair work, after the most recent annual Local Authority Road Maintenance (Alarm) survey showed a further deterioration in road surfaces because of real-term cuts in local authority maintenance budgets.
Transport secretary Louise Haigh pledged in October to fix a "pothole plague" as part of a government plan to repair up to 1mn more a year. An October 2021 spending review by the previous government had pledged more than £2.7bn of local highway maintenance funding over the three tax years from 2022 to 2025 to local authorities outside London and the eight largest city regions. The funds, including monies to fix potholes, have failed to arrest a decline on UK roads.
Motorist body AA said that up to September this year pothole related breakdown call-outs have increased by 2pc compared with the same period of 2023. The other leading UK body representing road users, RAC, said its pothole-related breakdown numbers went up by 10pc in the 12 months to 31 March.
Government data show UK bitumen consumption slipped to 1.54mn t in 2023, the lowest since 2016. Consumption was 1.89mn t in 2021 and 1.56mn t in 2022. In the first seven months of this year consumption was 835,000t, 9pc down from 917,000t in the same period of 2023.
