1. POTENTIAL EXPORT MARKET OF BITUMEN

2. AGENDA OF DISCUSSIONS
1. BITUMEN AVAILIBILITY IN INDIA
2. BITUMEN DEMAND IN INDIA
3. REGIONAL AND SEASONAL
IMBALANCES
4. EXPORT MARKET
5. EXPORT PLANNING & LOGISTICS
6. STRENGTH & WEAKNESS ANALYSIS

3. 1. BITUMEN AVAILIBILITY IN INDIA
BITUMEN PRODUCERS:
3 Large players IOCL, HPCL and BPCL.
Historically cooperative with each other.
Maintains price parity.
Competition exists in terms of “discounts”.
Large customers have strong bargaining power.
Low key “R & D” facilities and lack of lateral interactions with the actual users.

4. Dedicated distribution network do not exist.
However transporters play an active role between actual users and the producers.
Bitumen is not a “priority” or “important” product on policy making bodies of PSU producers.
AVAILABLE GRADES:
By penetration grades only:
60/70
80/100 (although all over the world this grade mostly known as 85/100)
30/40

5. Not available or not easily available
100/120 Penetration Grade
Blown Bitumen
Cutback Bitumen
Modified Bitumen
Emulsion (on a regular basis)

6. Bitumen Availability in India 2005-6 (TMT)
Comp
any
Refinery
Capa-
city
30/40
60/70
80/100
Emul-
sion
Modi-
fied
IOC
Panipat
500 Y
Mathura
550 P
Koyali
715
Haldia
450
Digboi 15
CPCL
360
Sub-Total
2590
= 58.1%
HPC
Mumbai
Vizag
330
830
= 18.6%
BPC
440
KRL
Cochin
300
740
= 16.6%
MRPL
Mangalore
Total
4460

7. 2. BITUMEN DEMAND Present demand is increasing at about 5-7%.
Growth in demand due to National Highway segments and Rural road segments.
Modified Bitumen market to grow to reach minimum 10% of total Bitumen demand by – Market size expected 400 TMTPA. (Current Market size: About 150 TMT)
Bitumen Emulsion Market to grow to reach minimum 5% of total Bitumen demand by – Market size expected 200 TMTPA. (Current market size: About 80 TMT)

8. Bitumen Demand outlook in recent years
Sales in TMT
Growth in TMT
% Growth
03-04
3300
500
17.8%
04-05
3600
330
10.0%
05-06
3800
200
5.0%
06-07
4000

9. SOME OTHER ASPECTS OF BITUMEN DEMAND
The Bitumen market will expand with +5% growth rate in coming years.
Demand for value added Bitumen will grow
Customers will demand quality product and services.
Taxation aspects will play a major role for Customers to source Bitumen.
Distance vis-a-vis transport facilities of Bitumen will be a major factor for the Producers / Customers.

10. 3. REGIONAL & SEASONAL IMBALANCES
Region Basis Seasonality Indices(% of Annual Demand)
Region
Jan / Mar
Apr /
Jun
Jul / Sep
Oct / Dec NR 26 28 18 ER 31 20 23 WR 37 32 5 SR 35 27 AI 33 29 13 25

11. Seasonality of Demand (2006-07)
Capacity
Gap
% of Total Demand
Apr – June
1160
1100
- 60
29.0%
Jul – Sept
520
+ 580
13.0%
Oct – Dec
1000
+ 100
25.0%
Jan - March
1320
- 220
33.0%
Total
4000
4400
+ 400
100.0%

12. Regional Imbalances (2006-07) (in TMT)
Demand
Capacity
Gap NR
1492
1050
442 ER
1158
465
- 693 WR
836
1625
+ 789 SR
514
1260
+776 AI
4000
4400
400

13. Result of Imbalance
North and East Region face product shortage, while West and South have surplus
With growth of Bitumen demand, production capacity will grow and imbalance also may get enhanced
Price parity may not be maintained – due to basic economics.

14. Solutions to Regional Imbalances
Transport Logistics – Low cost alternatives required
Inland Depots – additional storage capacities required
Augmentation of packing capacity to pack the excess capacity in lean season and also storage and distribution facilities of packed Bitumen.
Logistics of packed Bitumen to be enhanced – for (1) transport (2) user friendly mechanism.
……….Cont

15. Conversion of basic product to value added product, pack and store.
EXPORT

16. 4. EXPORT MARKET
Present Situation: Small quantity export by IOCL to Nepal, Bangladesh and Myanmar. All packed cargo.
Total Indian export: 2004 : 15,000MT, 2005 : 46,000 MT
No reported export by other Producers.
No export marketing division for Bitumen in any of the PSU.
No existing mechanism to calculate workable export price on FOB basis.
No readily available hard currency price of Bitumen.

17. Price Comparison
Earlier Indian Bitumen price was high compared to readily available export cargo from other countries.
Due to recent price rationalization, the prices between Indian product and product from other Bitumen exporting countries has narrowed down.
Ocean freight may play a major role for Indian cargo to create a niche market.
Huge demand created by infra-structure development programme by other countries should create market for Indian Bitumen.
ADB membership should help in price comparison.

19. Possible Export market
Neighboring Countries : Nepal, Bhutan, Bangladesh, Sri Lanka, Myanmar, Pakistan (?)
Asian Countries : China, Vietnam, Cambodia, Afghanistan
African Countries : Ethiopia, Somalia, Tanzania.
Australia

20. Neighboring Countries (Packed Bitumen)
Nepal and Bhutan are traditional buyer of Indian Bitumen. Only IOCL has a market set up, Invoice system, Distributor, and also a separate special Indian Rupee price for them. Market size : about 18,000 – 20,000 MTPA. Demand to increase rapidly in coming years.
There is a hard currency Bitumen market in Nepal and Bhutan – projects aided by ADB. Should be very attractive for HPCL. (i.e., IRCON Project).
Sri Lanka has an import market of about 25,000+ MT.
Myanmar: IOCL has a presence through Indian contractors. There is scope of regular supply by HPCL.
Pakistan : They imports regularly from Iran and Saudi. In changing situation why not from India (Mumbai to Karachi freight is very competitive)

21. Asian Countries China : The giant importer
2005 : Own Production: 9.70 Mil MT
Import : 3.17 Mil MT
2006 : Projections : 15% + increase in Import Demand
Main Suppliers:
Korea (42%), Singapore, Taiwan, Japan, Thailand and Iran.
Supply from Iran has a growth rate of 200%.
Required Both Bulk as well as Packed cargo.
High Season of Import: June - October

22. Vietnam No Domestic Production Infra-structure growth rate is high
2005 Import : 300,000 MT
2007 projected Import: 500,000 MT
Main Suppliers: Singapore, Korea, Iran
Major imports of packed Bitumen
June – October : Regular import

23. Afghanistan Major Road Projects Under ADB and World Bank Funding.
USA has a major say in all the contracts – as a result supply from Iran is not easy.
Several Indian contractors are working.
Packed Bitumen supply from India (Mumbai) should be feasible – via Karachi.
Market size: 200,000 MT ( )

24. African Countries Ethiopia, Somalia, Tanzania.
Close proximity to Mumbai Port.
African Bitumen producers / Exporters:
South Africa, Egypt, Nigeria and Kenya
High Demand during April – September
Most projects are aided by UNDP, WB or similar organizations.
Liaison work is more important than price.

25. AUSTRALIA Present Demand : 900,000 MT 2005 Import : 100,000 MT +
Main supplier : Singapore, Thailand
Strong and increasing demand for import
Strict Technical Specifications
High Demand during June – October
Ready to pay good price

26. 5. EXPORT PLANNING & LOGISTICS
BULK BITUMEN EXPORTS:
HPCL at present does not have logistics facilities for Bulk Bitumen Exports.
For Bulk Bitumen Exports HPCL Requires:
(1) Suitable Storage Terminal at the Ports – Mumbai and Vizag (about 5,000 MT + each)
(2) Time Chartering arrangements with available Bulk Bitumen Carriers – which are in short supply.
Sustainable, regular export contract with dependable buyers.
Should be able to Supply to Nepal in Tanker Load (ex-Lucknow)

27. Packed Bitumen Exports:
No significant logistics problems.
Sustainable policy, planning and price mechanism required.
Knowledgeable Human resource required.
Dependable agent with export market knowledge required.
Technical specifications adjustment required – based on target country (If).

28. STRENGTH & WEAKNESS ANALYSIS
A PSU oil Company – having full fledged refineries and flexible production pattern and enjoy the economies of scale.
In case of non-export – will not suffer heavily. Have a strong domestic market.
Export will help to disburse the excess inventory – especially in lean seasons.
Strong presence in two most important port cities in India, i.e., Mumbai and Vizag. One in West Coast another in East Coast.
Have financial strength to establish special R&D for required changes in Specs (if required) and also for new type of packing (i.e. poly packs).
Good product line – cargo available for export.

29. Weakness: A PSU Company – strong bureaucratic norms and restrictions.
Policy decisions takes time – while international trading requires prompt actions.
Domestic prices change without notice – but there should be sustainable international price.
Long time planning (about 2 years) required.
Unsure stand on several “not-so-ethical” business practice in International Trading.
Bitumen is not a “STAR” product.

30. CONCLUSION
TODAY OR TOMORROW - GLOBAL MARKETING CONCEPT HAS TO BE ADOPTED –
WHY WAIT FOR TOMORROW ?
THANK YOU