Bitumen deficit bridged, but price problem persists; India's roads set to face a real test this winter

India’s bitumen supply situation has improved after a sharp squeeze during the peak of the West Asia crisis, but prices remain substantially above pre-conflict levels, raising concerns over the cost of road and highway projects, The Times of India reported on August 31.

The availability of the key road-building material has improved with increased domestic output and higher imports of Venezuelan crude. However, the shift in crude sourcing has not translated into a return to earlier price levels, ToI's report (by Dipak K Dash) said.

Russian crude supplies to India, which continued during the crisis, offered little support because the oil is largely sweet crude and is not well suited to producing high-quality bitumen. Venezuelan crude, on the other hand, has a higher bitumen yield but contains more sulphur, making it more expensive to process.


Also read | Kanpur-Lucknow Expressway slippages point to design issue, affected stretches need rebuilding: Official

The shortage had pushed prices of VG-40 bitumen, the grade widely used in road and highway construction, to more than Rs 1 lakh per tonne in May. Before the conflict, the same grade was available at around Rs 52,000-55,000 per tonne.

Prices have since declined as supply conditions improved. The latest data showed VG-40 prices at Rs 85,000-86,000 per tonne as of August 16. While this represents a significant correction from the May peak, prices remain well above pre-war levels.

Across grades and markets, bitumen prices currently range between Rs 66,000 and Rs 86,000 per tonne, depending on factors such as the grade, depot location and whether the material is sold in bulk or drums.

Officials and industry participants expect some further moderation in prices but do not foresee a return to the levels seen before the conflict. This could keep construction expenses elevated for road-owning agencies and developers.

The higher input costs could also require the government to continue compensating contractors for ongoing projects and factor in higher costs while setting estimates for projects that are yet to be awarded.

Also read | Govt to hire EIL for third-party quality checks on 5,000 km of highways and expressways

For now, however, availability is not emerging as a major constraint. Road construction activity typically slows during the monsoon as the laying of bituminous layers becomes difficult.

The bigger test will come between October and February, when construction activity gathers pace and agencies seek to accelerate work to meet annual road-building targets, ToI's report said. Higher seasonal demand during this period could put renewed pressure on supplies and prices, it added.