Market Trends of Europe Bitumen Industry
Road Construction Industry to Dominate the Market
- The majority of bitumen consumed is processed into asphalt for road construction. Asphalt is a mixture of rock aggregates and bitumen. Bitumen serves as a binding agent and, thus, is responsible for the stability of asphalt.
- Depending on the type of bitumen or composition of the mixture used, asphalt roads are suitable for regions with different climatic conditions or various levels of operational demands. Asphalt is also used for airport runways, parking decks, and port working areas.
- Roadways are a key sector determining a country's economic growth. Roads, airport runways, and parking decks are essential services that drive economic activity by channelizing trade and mobility. Massive investments are required to help modernize and maintain these systems.
- The infrastructure sector is experiencing stable growth due to increasing government spending to promote local infrastructure. Infrastructure activities are expected to increase significantly in Europe, especially in the transportation sector, owing to a developing network similar to China's silk route.
- As of February 2023, the Italian Government set a budget for major road development works. An investment of EUR 4.5 billion (~USD 4.93 billion) is being targeted for road works in Sicily, Calabria, Puglia, and Lazio. The funding is authorized by Italy's Interministerial Committee for Economic Planning and Sustainable Development (CIPESS). The road and motorway concessionaire ANAS will use it.
- Moreover, EUR 355.2 million (~USD 389.04 million) is sanctioned by the Ministry of Infrastructure and Transport (MIT) for maintenance and improvement works to the highway connecting Umbro with Laziale. It will upgrade the connection between the highway and the port of Civitavecchia.
- In April 2022, Mostostal Warszawa and Acciona started construction on the S19 Rzeszów Południe-Babica expressway in Southeast Poland. The contract is valued at approximately EUR 480 million (~USD 525.72 million) and will continue for 54 months, ending in 2026. When completed, the S19 expressway will become part of the international Via Carpatia route, connecting northern and southern Europe. This route will be over 700 km long.
- Two major road projects were planned in the United Kingdom in April 2022. One of the projects is for an upgrade to the A417. The other is for a new connection between the M6 and M54 motorways. The A417 project is worth GBP 460 million (~USD 585.59 million) and will see the route upgrade between Swindon and Gloucester.
- With such development projects across major European countries, the demand for bitumen is expected to be the largest for road construction projects.
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Germany to Dominate the Regional Market
- According to the European Construction Industry Federation, Germany's new construction order value in 2022 was EUR 99 billion (~USD 108.43 billion), 4.8% more than in 2021.
- The number of building permits in residential construction was 354,403 in 2022. 68,700 residential building licenses were issued from January to March 2023, a decrease of 25.7% from the same period in the previous year (January to March 2022: 92,500 building permits). The drop in construction projects is likely caused by the high cost of building materials and the aftereffects of the Russia-Ukraine Crisis.
- However, the construction of hotels in Germany is expected to rise sharply in the forecast period. As of 2021, 360 new hotels with 56.565 rooms had been in the pipeline. The year 2022 saw the launch of 89 new hotels and 15,780 rooms. 78 more projects with 13,073 keys are mooted for 2023. The pipeline of hotels is anticipated to stay strong for 2024 and beyond, with 153 projects and 22,769 rooms already in the works.
- In 2022, the government planned more than EUR 12 billion (~USD 13.14 billion) of investment for federal highways. Quite a few road construction projects are underway that'll add to the demand for bitumen.
- In March 2022, VINCI Highways started work on a contract to upgrade the B247 road between Mühlhausen and Bad Langensalza in Germany. This project is the first German federal road ever developed under a PPP scheme, with an investment of around EUR 500 million. The expansion of the B247 is the largest infrastructure project in Northern Thuringia. The project involves building two to four new lanes on a 22.2 km road. The road includes two new bypasses, 31 structures, two road bridges and five railway bridges, eight junctions, and around 6 km of additional state and federal roads. The project is estimated to be completed by mid-2025.
- As of Feb 2023, extensive road construction projects are being carried out in Germany in Rhine-Main, Saarland, and Rhineland-Palatinate. Lane widening works, as well as maintenance, are part of the plan. The project includes a budget of EUR 315 million (~USD 345.01 million) to upgrade and rebuild highways in the Rhine-Main region in 2023.
- Consequently, the demand for bitumen in Germany will likely be dominated by road construction projects, followed by infrastructure in the forecast period.
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