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Nigeria Concrete Roads Plan Reduces Bitumen Demand

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Nigeria’s policy push to switch to concrete roads from asphalt for its projects has begun to affect some existing paving work, denting bitumen requirements at the start of the dry season peak construction period.

Busy road project work in the past dry season saw Nigerian bitumen cargo imports reach 200,000t in the first half of 2023, according to Vortexa data.

This compares with 250,000t in the whole of last year, but import flows have dramatically fallen off since June, mainly because of heavy and persistent rain.

One bitumen supplier told Argus that current bitumen demand in Nigeria dropped to half its typical levels for this time of year. This comes after the country’s rainy season since July already led, as is usual, to drastic falls in rates of road and highway work.

Weather conditions improved in recent weeks, with dry weather starting to take hold in a peak activity season that usually lasts through to June, drawing substantial bitumen import cargo volumes into Nigeria’s numerous terminals.

Nigeria’s minister of works David Umahi declared the new administration’s policy shift in favour of concrete roads this summer, arguing that they last longer and are cheaper to build than asphalt roads that are made with bitumen.

While the asphalt-to-concrete move was challenged last month in Nigeria’s National Assembly, some market participants in the country’s bitumen sector said the proposed switch, which officially applies to new road and highway projects, already led to some existing federal asphalting projects being paused.

Construction sector end-users and bitumen importers’ uncertainty has led some of them to hold back from major bitumen purchase commitments.

But other market players expect work on a string of unfinished asphalt paving projects during the peak dry season to resume, helping to generate increased mixed asphalt production and therefore bitumen requirements in the coming months.

Mediterranean trading and supply firms looking for outlets for surplus volumes, as demand seasonally declines in that region and across Europe, point to a lack of spot cargo requirements into Nigeria.

Nigeria’s largest supplier Rubis Asphalt currently makes the most regular deliveries into the country, using its bitumen tankers into the Sapele and Port Harcourt terminals.

Two cargoes a month were additionally imported in September and October from Ivory Coast producer SMB’s Abidjan terminal using the firm’s 4,900 dwt time-chartered tanker San Biagio, three of them into two separate terminals in Warri, Nigeria.

The most recent delivery was completed last week into Gradient bitumen’s terminal. Gradient’s own sole tanker, the 6,033 dwt Jane Asphalt has been in dry dock at the Tuzla shipyard in Turkey since late August.

Nigerian bitumen import prices, on a CFR basis, rose to a 16-month high of $765-770/t on 15 September, having previously jumped to $801/t in May 2022, from a Covid period low of $205/t in April 2020.

The overall increase has been accentuated by gains for much of this year in bitumen tanker freight rates, which have added to Nigeria’s oil products import bill.

This trend has also been exacerbated by a weakening in the Naira against the US dollar.

Nigerian import prices have now retreated to $610-615/t CFR on rising product availability, weakening European demand, as well as falling tanker freight rates and a recent crude and high-sulphur fuel oil prices slippage.

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