Elections weigh on India’s bitumen consumption in May

Bitumen consumption in India fell by 6pc on the year in May, mainly because of the country's national elections and a looming monsoon season.

The country used 816,000t of bitumen last month, lower than 864,000t a year earlier and down by 2pc from 831,000t in April, according to latest preliminary oil ministry data.

Road-paving activities slowed down last month as government officials were busy with election duties, while road contractors and labours took breaks to cast their votes. Pre-monsoon showers in parts of the country and prolonged delays in disbursement of project funds from state governments also weighed on consumption.

But the drop in consumption did not surprise importers and dealers as they had already anticipated this earlier in the month. A few Indian refiners experienced higher inventories and had to slash their listed prices to attract more buying interest.

State refiners in Mumbai cut listed VG10 and VG30 bulk cargo prices by 3,360 rupees/t ($40.30/t) for the second half of May, from the previous two-week period. They had reduced listed prices by only Rs100/t for the previous fortnight.

Listed prices continued to fall in June as some refiners tried to liquidate more volumes before the monsoon season become widespread. But it remains to be seen if this will boost demand and how significant that change would be, market participants said, adding that consumption is likely to be lacklustre until September.

Lackluster consumption to pressure imports

The lower consumption leading up to May also led to a dip in import sentiment, as inventories in the region were mostly sufficient or higher. Importers were also cautious about accumulating excess supplies as conditions get wetter ahead of the onset of the monsoon season.

India imported 270,000t of bitumen in April, compared to 275,000t in March and 360,000t in April 2023, according to oil ministry data. Argus estimates that India purchased at least 93,000t of prompt-loading VG40 bulk cargoes from the Middle East in May.

Consumption and import levels are likely to continue going down in the coming months, market participants said. They also warned of some state budget cuts that came about because of the government elections, meaning there is less money for councils to maintain or build roads.

Importers are still trying to liquidate existing inventories, with some reporting higher stocks in Kandla, Mangalore and Karwar. Several said there were also delays in delivery of seaborne material, with around five vessels held up owing to maintenance works, although this cannot be confirmed.

But Middle East-origin seaborne bulk prices did not ease despite lacklustre import demand from key consuming India. Argus assessed weekly fob Iran bulk prices at $287.30/t for the week of 14 June, up by $6.30/t from the previous week's assessment. Export prices were firm on the back of tight supply in the Middle East, especially for VG40 grade cargoes.

By Chloe Choo