The Pandemic and Bitumen
bitumen manufacture : The world changed tremendously amid Covid-19. Economies nearly collapsed and trades were affected. Oil and petrochemical products were not an exception as well. It was a year full of dreads, people lost jobs and millions of people died. Following the demand plunge, oil and bituminous products got on a descending trend as well.
By the lockdowns and sever policies implemented to restrain the virus spread, construction sites slowed down. As the demand decreased, oil and bitumen prices fell globally. WTI oil reached negative 37.63 U.S. dollars per barrel for the first time in its history. Bitumen manufacturing was happening cautiously specifically in Asia. Meanwhile, oil prices plummeted drastically to the point where refineries cut production.
In the 1st and 2nd quarters of 2020, Asian refineries underwent a decrease in bitumen manufacturing due to the demand decline. Additionally, lockdowns and restrictions caused problems during shipping; for instance, the cargos going to china had to be redirected to other countries. However, a market projected some hopes for 2021 market, expecting an upcoming cure and vaccine to the global virus. The vaccination started in a couple of countries and Pfizer’s Covid-19 vaccine made it to get FDA approval for emergency cases. It means the economies may rise again. As we see, the prices are rising currently, considering the tight supply and rising demand.
Two most populous countries of China and India that have to hold the highest market demand for years, experienced tremendous demand destruction in 2020. Hopefully, July onwards, the construction season started and markets showed some movements.bitumen manufacture
2020 in China
Although China faced a dreadful year and was the origin of the disease, it could manage the pandemic faster than in other countries. By May 2020, it was back with full operation rates. After the lockdown, it had many uncompleted road projects; hence it considered increasing bitumen imports. Additionally, China required more bitumen to keep up to the 13th five-year economic plan.
China owes the fast recovery not just to the strong disease controlling strategies, but also the product pricing mechanism. The mechanism favors the refiners with the low crude oil price and strong refining margin.bitumen manufacture
2020 in India
The situation with India is really interesting because it is still facing about 20,000 new cases per day, but it is recovering from the hard lockdowns and getting ready to enter the market. Even though bitumen manufacturing had slowed down and imports were lower than expected,
restrictions are getting looser. Therefore, refineries and importers get the chance to prepare for the construction season. Accordingly, we had an increasing demand for oil and bituminous products in India.
Demand has recovered from the low point of it at the beginning of the year, but it is not anywhere near the point it was last year. Better prices are not just the result of increased demand; it also associates with the short supply. Refined products such as bitumen held a limited rate comparing to previous years. Many refineries shut down due to the huge losses, and some had a conversion.
“Refineries are closed for economic reasons; simple refineries are not making money anymore. refineries are shutting down due to the losses in many parts of Europe. But also I think there’s a bit of opportunity here because we’ve seen certain refineries move into a sort of conversion for the energy transition. We’ve seen biofuel; plants spring up with seeing certain refineries being turned into storage facilities as well. So there’s a big push over in Europe for renewable fuels and for cleaner and greener credentials for the majors.” Said Joel Hanley, editorial director of European & African Oil at S&P Global Platts. He also mentioned that it is the point which the world needs to turn to carbon emission-free fuels.
The new trend of biofuel has been controversial through recent years. It seems to bring a significant evolution in future.bitumen manufacture
The global Road Construction market has anticipated the road construction to grow considerably in the 2020 to 2026 period. This year growth was not fulfilling; therefore, we expect rising construction in upcoming years.
According to The Portland Cement Association (PCA), construction will rebound about 0.6% in 2021. Dodge reports also expect 4% growth of construction works and the worth of nearly 800 billion.
Consequently, the rise of the construction rate leads to consuming more bitumen and cement. If the demand rises while the supply is still tight, we confront rising prices. Refineries seem to be preparing to supply required bitumen.
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Bitumen Production in 2021
Simply put, global hope for recovery is surging. Meanwhile, demand is improving, and it means better price. Asia seems to have adapted sooner comparing to the US and Europe. We can see a sharp V growth is emerging in China, and it has already reached pre-pandemic demand levels. China plans to expand the refining capacity and record for the major refined product exporter by the end of 2021.
We are probably going to look into demand expansion for petrochemical products, including bitumen. Accordingly, bitumen manufacturing will increase, in addition to countries’ bitumen exports and imports volume growth. It is not only about bitumen demand expansion but all sort of refined products.
Bitumen manufacturers who survived the pandemic, currently expect more success in production and demand next year.