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BITUMEN Market Demand/ Marketing Channels

BITUMEN Market Demand/ Marketing Channels. Agenda. World Bitumen Demand Indian Bitumen Demand in the Past Short Term Bitumen Demand outlook Long Term Bitumen demand Outlook Market Channels Conclusions. World Bitumen Demand. In Million MT.

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BITUMEN Market Demand/ Marketing Channels

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  1. BITUMENMarket Demand/ Marketing Channels

  2. Agenda • World Bitumen Demand • Indian Bitumen Demand in the Past • Short Term Bitumen Demand outlook • Long Term Bitumen demand Outlook • Market Channels • Conclusions

  3. World Bitumen Demand In Million MT • World Bitumen Demand expected to grow @ 2.1% Fastest gains expected in Asia Pacific @ 3.3% 115 104 95 87

  4. Fastest Gain in Emulsion World Bitumen Demand In Million MT

  5. Bitumen Demand in Neighboring Countries

  6. MOST OTHER MARKETS SHIFTED AWAY FROM PAVING BITUMEN • % Usage • TMTPA • Mexico • France • Thailand • Spain • USA • Brazil • Japan • UK • Germany • Italy • India

  7. Road Dominated Economy Share of Road Traffic has increased

  8. Our Highways • Highway length only 2nd to USA but has many deficiencies. • National Highways: Only 2% of Indian Road Network but carry 45% traffic. • State Highways: Only 4% of Indian Road Network but carry 40 % traffic.

  9. Paradigm Shift in Development of Road Sector • Road development in the last five years has increased tremendously - 23,000 Kms of Highways added during this period. • The length of rural roads increased from 2 lakh Kms in 1951 to 30 lakh Kms in 2001.

  10. National Highways Development Project • India’s largest ever highways project • Major initiative for capacity enhancement of NHs • World class roads with uninterrupted traffic flow • 4/6 laning of around 13,150 km • Total cost Rs. 54,000 crs. • Consumption @ 300 MT/ Km

  11. National Highways Development Project Map

  12. Benefits of programs NHDP, PMGSY etc • Improved accessibility and mobility • Reduced travel time. • Enhanced efficiency of road transport. • Overall feel good factor for roads in public perception. • Growth of 8.5% in Cement Industry and 7.8% in Steel Industry with implementation of NHDP. • Employment generation: 18 crore man days. As per WB there will be saving of Rs 8000 crore per annum on fuel and maintenance of vehicle on GQ alone.

  13. However following issues will have to be addressed • Seasonality of Demand • Regional Balance of Demand

  14. Seasonality of Demand (2006-07) 1320 1160 1000 520

  15. Seasonality of Bulk Bitumen Demand (2006-07)

  16. Solution to the seasonality gaps • Meet the Bulk Bitumen Demand First. • Pack the remaining available Bitumen. • Packing Capacity to be enhanced to pack during lean seasons. • Storage of Packed Bitumen to be augmented. • Logistics of Packed Bitumen to be arranged.

  17. TMT  Demand Capacity Gap NR 1492 1050 -442 ER 1158 465 -693 WR 836 1655 819 SR 514 1020 506 AI 4000 4190 190 Regional Imbalances (2006-07)

  18. Solutions to Regional Imbalances • Logistics- Low Cost Alternatives • Inland Depots

  19. Agenda • World Bitumen Demand • Indian Bitumen Demand in the Past • Short Term Bitumen Demand outlook • Long Term Bitumen demand Outlook • Market Channels • Conclusions

  20. Economic Indicators: Expected Population Growth Rate Population in 2021: 1625 Million

  21. Economic Indicators : Urbanization Urban Population in 2021: 650 Million

  22. Economic Indicators : Food grain Production Increase in Foodgrain movement

  23. Economic Indicators : Growth in Vehicular Population Growth w.r.t. base figures of 2001

  24. Vision 2021 for Express-ways Kms Assuming 80% Bitumen Roads Bitumen Demand 2001-11 : 1200 TMT 2011-21 : 2800 TMT

  25. Kms 2001-11 2012-21 Four/ Six Laning 16000 19000 Two Laning 15000 7000 Strengthening of Weak Pavements 20000 24000 Expansion of Highways 10000 12000 Vision 2021 for National Highways Bitumen Demand 2001-11 : 12900 TMT 2011-21 : 13500 TMT Assuming 90% Bitumen Roads

  26. Kms 2001-11 2012-21 Four/ Six Laning 3000 7000 Two Laning 35000 60000 Strengthening of Weak Pavements 30000 40000 Expansion of Highways 10000 20000 Vision 2021 for State Highways Bitumen Demand 2001-11 : 7700 TMT 2011-21 : 13500 TMT Assuming 90% Bitumen Roads

  27. Kms 2001-11 2012-21 Two Laning 20000 40000 Strengthening of Weak Pavements 30000 40000 Improving Riding quality 50000 50000 Expansion of Highways 6000 12000 Vision 2021 for MDR Bitumen Demand 2001-11 : 4100 TMT 2011-21 : 6700 TMT Assuming 90% Bitumen Roads

  28. TMT 2001-11 2012-21 Express-way 1200 2800 National Highways 12900 13500 State Highways 7700 13500 MDR 4100 6700 Rural Roads 4100 5000 Total 30000 41500 LR Bitumen Demand Outlook Bitumen Requirement will be maximum for National Highway segment 2001-03:6100 TMT

  29. Value Added Bituminous Products Bitumen Emulsion market to grow to minimum 5% of Bitumen demand by 2007 i.e. Market Size of 200 TMTPA Modified Bitumen market to grow to minimum 10% of Bitumen demand by 2007 i.e Market Size of 400 TMTPA Current Market Size: 100 TMT Current Market Size: 60-80 TMT

  30. Bitumen Demand Outlook • In 2nd decade of the century (i.e. 2011-21) Bitumen demand is likely to grow by 38% if the road development takes place as per Vision 2021. • Bitumen Production Capacity Augmentation will be required.

  31. Agenda • World Bitumen Demand • Indian Bitumen Demand in the Past • Short Term Bitumen Demand outlook • Long Term Bitumen demand Outlook • Market Channels • Conclusions

  32. Marketing Channels • The demand of Bitumen for Express-highways. National Highways and State Highways will be more than 70% of total demand. • These customers will be multi-location and large volume customers. • They will like to deal directly with the suppliers due to large size procurements. • The balance demand will consist of few large size customers and balance small size customers. • Channels can be developed for small size customers. • Channels can be Middle-men, Third party Logistic etc.

  33. Agenda • World Bitumen Demand • Indian Bitumen Demand in the Past • Short Term Bitumen Demand outlook • Long Term Bitumen demand Outlook • Market Channels • Conclusions

  34. Conclusions • The economy of the country is set to grow at high rate of 6-9% in next two decades. • The growing economy will require the developed infrastructure to support. Thus road development and hence growth in Bitumen demand is expected. • Bitumen demand is likely to touch 4 Million MT mark by 2007. The current production capacity is 4.2 Million MT. • Demand of value added bituminous products will also go up. Modified Bitumen market may gorw up to 400 TMTPA and Emulsion market may grow to 200 TMTPA. …..Cont

  35. Conclusions • In short term i.e. upto 2007 supply of Bulk Bitumen will take priority and packing will have to be done in lean demand season. • This will require augmentation of packing capacity to meet packing in non-paving season and packed storage facilities. • Logistics of packed Bitumen will have to be …..Cont

  36. Conclusions • In short term i.e. upto 2007 North and East may face product shortage while West and South may be surplus. • This will require innovative multi-modal logistic solutions for bulk and packed Bitumen. • On long term basis Bitumen demand will grow and require augmentation of Bitumen Production capacity by 2012. • Channels may be used to reach small size customers.

  37. THANK YOU

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