Bitumen Market Analysis
World demand to rise 3.6% annually through 2017
World demand for asphalt is projected to rise 3.6 percent annually through 2017 from a weak 2012 base to 121 million metric tons (734 million barrels). Gains will be driven by especially strong growth in consumption in China and other developing countries as they work to improve their transportation infrastructures. Mature asphalt markets in developed nations, which declined between 2007 and 2012, will recover steadily, though in most cases demand will not regain 2007 levels until well after 2017.
Asia/Pacific region to be fastest growing market
The Asia/Pacific region has overtaken North America as the largest regional market for asphalt and will continue to record the fastest advances through 2017, driven primarily by strong growth in China and India. China alone accounts for over 20 percent of the global market and is expected to surpass the US as the world’s leading asphalt consumer by 2017. However, growth in China will decelerate as massive national infrastructure programs give way to smaller projects and road maintenance. In contrast, India is expected to continue with large public works projects that are necessary for the country’s continued economic development. Growth is also expected to be strong in other developing Asian countries where large public works projects are planned. However, this will be offset to some extent by slower growth in mature markets like Japan and Australia. Also, gains in many of the region’s developing markets will continue to be affected by political and financial issues.
Demand to recover in North America, Western Europe
North America is a major asphalt consumer due to the need for maintenance on the massive regional network of roads and highways. Demand for asphalt in the United States will rebound from the sharp declines in the 2007-2012 period, driven by stronger economic growth and increased construction activity, though demand in 2017 is expected to remain below the 2007 level. The US and Canada are significant consumers of asphalt for roofing products; demand for those products will rise with increased building construction expenditures.
Recovery in asphalt demand in Western Europe will be driven by increased expenditures on road maintenance and repair applications after years of very low spending on infrastructure improvements. Many countries have road repair backlogs, which will bolster demand for asphalt. However, while demand for asphalt will register respectable growth through 2017, gains will not make up for the declines seen in the 2007-2012 period.
Bitumen Market Analysis and Segment Forecasts to 2020
Bitumen is petroleum product derived from heavy crude oil having an American Petroleum Institute (API) gravity of less than 10. It is referred to as Asphalt in the U.S. and is extensively used in road construction and as a waterproofing agent. With the growing infrastructural activities in high growth markets such as China, Brazil and India, the demand for bitumen is expected to grow at a steady pace over the next six years. Bitumen is available in a variety of products; with paving grade bitumen being the most commonly used.
Paving grade bitumen is used in the formation of road bases and was the highest consumed type of bitumen in 2012 accounting for over 70% of global bitumen consumption. The other commonly available forms of bitumen include oxidized bitumen, cutback bitumen, bitumen emulsion and Polymer Modified Bitumen (PMB). PMB involves the addition of various polymers to bitumen in order to enhance its physical and chemical properties. This segment is expected to witness the fastest growth over the forecast period as a result to increasing application scope in developed countries such as U.S., Germany and Canada among others. The global demand for bitumen was 112.53 million tons in 2013 and is expected to reach 135.07 million tons in 2020, growing at a CAGR of 2.7% from 2014 to 2020. The market revenue is expected to reach USD 95.77 billion by 2020, growing at an estimated CAGR of 3.8% from 2014 to 2020.
Application markets covered in this report include roadways/road construction, waterproofing (roofing), adhesive and insulation. Road construction was the largest application of bitumen and accounted for over 75% of global consumption in 2013. Infrastructural activities on improving road networks in developed and developing nations is expected to drive bitumen demand. In addition, increasing applications of polymer modified bitumen (PMB) as chemical additives, adhesives, in household construction and road construction is expected to have a positive impact on the market. Waterproofing was the second largest application of bitumen and consumed over 16 million tons of bitumen in 2013. Waterproofing forms an important part of roofing and building construction. The growing infrastructural activities in developing countries such as China and India are expected to drive the growth of bitumen for its use in waterproofing.
Fig 1. Bitumen market volume share, by application, 2013
North America was the largest consumer of bitumen due to the extensive road network of the region. The region accounted for 30% of the global bitumen consumption in 2013 and repairing and maintenance of roads is expected to keep the demand high in this region over the forecast period. China and India are expected to witness the fastest growth in the market at an estimated CAGR of 5% and 4.8% respectively from 2014 to 2020 due to government initiatives in these countries for the development of infrastructure. However, the cost of bitumen is higher in these regions due to major imports from Canada, which is the largest bitumen supplier in the world.
The global bitumen market is highly fragmented with the top 8 companies accounting for less than 40% of the share in 2013. Shell Bitumen and NuStar Energy were the largest manufacturers of bitumen in 2013 with a combined share of over 12%. The other key companies in the market include British Petroleum, Exxon Mobil, Marathon Oil Corporation and Volero Energy Corporation. Companies are increasingly focusing on product development and innovation in order to obtain competitive advantage. Shell recently launched a fire resistant bitumen grade for
roofing application. In addition, there is high level of merger and acquisition in the market in order to gain increased market share.