Singapore, 7 October (Argus) — Indian bitumen demand is expected to firm from the second half of October as the monsoon nears its end. Heavy rains through major parts of the country, which were expected to subside in mid-September, have been prolonged for nearly a month.

"We expected that demand will be strong from late October, and to pick up even further after Diwali," said an Indian importer.

Buying has resumed gradually in recent weeks with spot deals for bulk and drummed cargoes concluded between Indian buyers and Middle East-based sellers.

"We forecast that bitumen demand may continue to grow at 6-8pc in line with healthy pick-up in road execution. However, growth or offtake may be a notch lower than overall growth in road execution given the continued shift to cement or rigid pavement roads," said director at Crisil Research, Hetal Gandhi.

Domestic demand for bitumen fell for the fifth consecutive month in August as the monsoon hindered infrastructure and road construction, which were already pressured by the second wave of Covid-19 infections in April-June.

Bitumen consumption fell to 331,000t in August from 406,000t in July and 321,000t in August 2020, oil ministry data showed. Consumption grew to 904,000t in March 2021, the highest since at least 1998.

Production of bitumen fell to 181,000t in August from 291,000t in July and 179,000t in August 2020. Refiners prefer crude grades that can produce more gasoline as consumption of the motor fuel has exceeded pre-pandemic levels in 2019.

The pandemic took its toll on bitumen when roadworks slowed sharply through April-May. The escalating number of cases in India affected port and supply chain logistics, while workers returned to their hometowns due to the lockdown.

But demand is likely to pick up as India had announced a strong push for infrastructure development in its 2021 fiscal year budget, allocating around 4pc of the budget to this sector. The country has plans to near completion its target of building 34,800km of roads and highways by 2022, under its Bharatmala Pariyojna plan.

The south Asian bitumen market is expected to see nearly 4pc growth in demand in the coming few years, supported by the strong push for infrastructure development in key nations like India.

Argus assessed prices at $297.50/t fob Bandar Abbas on 1 October, up by 15pc from $258.50/t on 3 September. Stronger demand from regional markets like India from a seasonal pick-up coupled with reduced production in the past month have accounted for the increase in prices.

By Mahua Chakravarty & Sathya Narayanan

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