Singapore, 22 September (Argus) — Indonesia's bitumen demand is expected to pick up towards the final quarter of the year during the annual peak season for construction and roadworks, although project delays and pandemic-related restrictions may slow overall consumption of road paving materials.

Bitumen demand in Indonesia typically rises sharply from September onwards and peaks in November, before easing by the end of the year. Some importers are expecting a shorter peak season this year with lower traded volumes because of continued delays to fund dispersal from provincial governments for road construction and maintenance and a possible diversion of government expenditure to Covid-19 pandemic-relief efforts.

Domestic market participants estimated imports for the first half of September about 20pc higher than the previous month but still significantly lower compared with the same period in past years. Imports for the second quarter of 2021 totalled 144,631t, down by 12pc from the previous quarter and 20pc lower than the same quarter in 2020, according to GTT data.

Domestic bitumen demand in Indonesia plummeted in early July, following the implementation of strict lockdown measures to contain the spread of Covid-19. Strict emergency curbs were imposed on the islands of Java and Bali on 3 July to stymie record daily cases.

Federal government expenditure on healthcare has risen by nearly 19pc from the previous year because of the pandemic. Soaring expenses for pandemic-relief efforts have raised concerns among market participants in the construction sector about the possibility of decreased funding for road construction and maintenance projects.

Large-scale construction projects in the country are heavily reliant on state funding.

The federal government has not made any formal announcement about diverting budget funds to the country's healthcare sector.

An estimated 3-5pc contraction in construction projects could take place in the coming months. But the issue of budgetary cuts was less salient compared with the slow utilisation of allocated funds.

"Some completed projects were only paid up to 70pc as a first payment. A second payment for the balance owed would be paid towards the end of 2021 or even the start of 2022," said a local market participant.

Uncertainty about the bitumen outlook has pushed buyers to purchase on a need-to basis across major districts in Java, Borneo and Kalimantan.

By Norman Fong

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