The Bitumen market is poised to record strong growth on the back of favorable policies and increased government spending in 2023

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The demand for bitumen has been on the surge worldwide, due to the increased focus on infrastructure development, in recent years. In 2023, the demand is expected to further grow on the back of favorable policies and increased spending on government projects. Emerging markets such as India are heavily investing in the development of public infrastructure, including roads and highways. Consequently, bitumen consumption is expected to increase significantly in 2023 and beyond.

• In the 2023 – 24 Union Budget, the Indian government has announced increased spending on the development of road and highway infrastructure. The Road Transport and Highways Ministry (MoRTH) has been given an allocation of INR 2.7 lakh crore for 2023 – 24. This is representing a growth of nearly 10% compared to the allocation made during 2022 – 23.

The higher allocation is part of the government strategy to help the ministry in meeting its 25,000-kilometer road development target announced in the 2022 – 23 budget. The higher allocation will also enable the government to cover the rising expenses, which include higher interest rates and land acquisition costs. Notably, increased road and highway construction activities will also aid bitumen consumption in India in the 2023 – 24 period, thereby supporting the growth of the construction chemicals segment.

Higher spending on road and highway construction projects is also getting reflected in the net profit numbers of bitumen players in India.

• Agarwal Industrial Corporation Limited, for instance, revealed a net profit growth of 22% in Q3 FY 2022 – 23. One of the largest private sector players in the bitumen market, the firm is projected to continue its upward growth trajectory in terms of revenue and net profit in FY 2023 – 24.

The demand for bitumen is also expected to grow significantly in other Asia Pacific countries such as China and Indonesia. While Indonesia is building a new capital city called Nusantara that will replace Jakarta, China is heavily investing in bitumen products to build advanced road networks across the country. The development of Nusantara means that Indonesia will also increase its investment in the development of local infrastructure such as roads and highways over the next few years. This will further drive the bitumen demand across the region, thereby supporting the growth of the construction chemicals market in the Asia Pacific.

In the Middle East, especially in the United Arab Emirates and the Kingdom of Saudi Arabia, the development of smart cities and world-class transport infrastructure is also expected to aid the demand for bitumen products over the next three to four years.

• Under the 10-year road plan, the United Arab Emirates is expected to invest AED 5 billion in the development of infrastructure. Saudi Arabia, on the other hand, has announced to invest US$10.6 billion in developing local infrastructure projects, which also include road networks and public transport.

In the United States, spending on highways, roads, and bridge projects is also on the rise. According to a report from the American Road & Transportation Builders Association, local and state governments have dramatically increased their spending on these projects between 2021 and 2022. This trend is expected to further continue from the short to medium-term perspective in the United States, thereby supporting the demand for bitumen in the North American market.

• In March 2023, the controversial US$9.7 billion I-45 expansion project also received approval for the resumption of construction activities, after the Texas Department of Transportation and the Federal Highway Administration entered into an agreement to resolve the civil rights investigation into the construction project. The resumption of construction activities, for the expansion of the I-45 project, will further aid bitumen consumption, supporting the market growth in the United States.

In Europe, road development and maintenance-related projects are expected to see a significant investment inflow from government organizations. The German government, for instance, has announced an investment plan of US$290 billion for infrastructure development by 2030. The growing investment will, therefore, keep aiding the demand for bitumen products in the European region from the medium to long-term perspective.

Globally, investment in the development of road and highway infrastructure is projected to increase over the next three to four years. The increased bitumen demand, in the global market, is therefore expected to keep supporting the growth of the global construction chemical industry from the short to medium-term perspective.