Australia's funding limits leads to drop bitumen imports
While Australia’s bitumen import share has experienced a funding drop for 3rd year since 2020, it is expected that it will fall again by around 20% year-on-year after the winter period from June to August.
Market participants appoint this decline is primarily attributed to ongoing financial challenges and the lack of major road paving projects. They assert that although there has been a slight uptick in demand since mid-October, overall consumption remains consistent with the same period last year.
Furthermore, bitumen consumption is expected to fall by 10-20% in 2024 compared to the previous year and it is predicted that the outlook may not improve for the next two years, due to continued inflationary pressures on the economy.
Having enjoyed the smaller portion of funds for road maintenance, local governments have chosen to prioritize other essential sectors such as healthcare. Most current projects are smaller in scale, largely centered on patching potholes.
According to the Argus report, The Australian government plans to increase road maintenance, particularly in regions like southern Australia, according to the Minister for Regional Development, Local Government, and Territories. However, experts noted that the definition of “road projects” has evolved, now encompassing activities such as grass cutting, safety barrier installation, and traffic light construction—tasks that do not involve bitumen or full-scale road paving.
Approximately a third of the total infrastructure budget is allocated to road maintenance and paving, as noted by local importers. Demand has also weakened in Western Australia, where authorities have delayed pricing for paving contracts due to budgetary constraints
However, there is sufficient stock to meet infrastructure needs till January 2025, and there are no plans to acquire additional cargo from bitumen importers.
In New Zealand, the story is completely different as demand for bitumen imports is expected to increase, driven by robust domestic consumption.
Having a good weather condition in summertime (Dec-Feb), market participants mostly is going to build up their inventory level before the new year. Post-winter statistics for consumption and sales are predicted 3-4% higher than the same in 2023 and bitumen imports reach 160,000-170,000 mt this year.
With 54,000 mt of bitumen imported in the first half of 2024, New Zealand’s bitumen import went down from 144,220 mt during the same period last year, according to GTT data.
