India's bitumen consumption in 2024 fell by 4pc on the year, while imports fell by 16pc on the year, as national elections and delays in the disbursement of project funds by some state governments hampered project works.
Consumption totalled 8.44mnt in 2024, down from a record high of 8.81mnt in 2023, according to preliminary oil ministry data. Imports totalled 2.8mnt in 2024, down from 3.32mnt in 2023, the data showed.
State governments have been using the infrastructure funds for other verticals and subsidy schemes, said market participants, and this has delayed the disbursement of project funds. Imports also fell as higher outstanding payment receivables from contractors forced importers to not sell cargoes on a credit basis, but contractors were not ready to purchase on cash basis because of the fund crunch.
"Inventories are adequate and demand for cargoes is good but we cannot sell on credit as payment outstanding is higher," a major Indian importer said, adding that they would be immediately sold out if they sell with a longer-than-usual credit period.
Meanwhile, vessel-owning traders have been importing cargoes to avoid vessel idling costs. This has increased inventories in some parts of the country.
"Demand is not that great, and tanks are high," a west coast India-based importer said. "We are selling on credit [to offload stocks], so the shipment turnaround time is less. [But] that doesn't mean it is all profitable, the margins are bad," the importer added.
Some Middle East cargoes earmarked for southeast Asia were also redirected to India in the last quarter as the price arbitrage window was closed. This increased inventories for the short term, but this did not increase import volumes for the year as overall demand was weak, market participants added.
Indian importers expect consumption in 2025 to be higher than last year, with some expecting it to surpass 2023 levels as there are projects pending. But this will be contingent on the timely disbursement of funds.
Some market participants are expecting imports to surge this year as demand for imported cargoes is stronger because of competitive offers, compared to cargoes from state-controlled refiners. This could pressure refiners to cut production, which would in turn support imports, the participants added.
Bitumen production rose by 1pc on the year in 2024 to 5.2mn t, from 5.13mn t in 2023. This is unlikely to change in 2025 as there will not be any capacity augmentation for bitumen, but producers are mulling output cuts and may instead import cargoes at a relatively cheaper levels from the Middle East, a source close to a state-controlled refinery told Argus.
