ARIA Commodities

News and Views

South African Bitumen Exports Surge Amidst Increased Activity

May 11 2022 I News and Views

South Africa is experiencing a notable surge in bitumen imports, reflecting a robust uptick in activity within the sector. According to recent data from Argus Media, this increase in bitumen imports is a direct result of rising demand driven by extensive infrastructure projects and growing economic activity. The surge highlights South Africa's emerging role as a key player and demand centre in the global bitumen market.

The boost in bitumen market is primarily attributed to the escalating activity in infrastructure development across South Africa and beyond. With numerous road construction and maintenance projects underway, there is a heightened demand for bitumen, which is essential for asphalt production. South Africa, with its well-established refining capabilities and strategic geographic position, has become a crucial supplier to international markets too. South Africa has also seen a significant increase in exports which is a welcome opportunity to push global trade volumes.

The rise in export volumes not only indicates a strengthening of the refining sector but also contributes to an improved trade balance. South Africa Bitumen Market size was valued at USD 893.2 million in 2021 and is expected to grow at a CAGR of 8.6% during the forecast period 2022 to 2028 according to forecasts by Precision Business.

However, the rapid expansion of bitumen exports presents certain challenges. African buyers of bitumen as of course subject to the fluctuations in freight rates, which can be influenced by geo-political events thousands of miles away. Shortages of container ships globally, exacerbated by longer east-west journey times as vessels sail around the Cape of Good Hope to avoid the risk of being attacked by Yemen's Houthi rebels in the Red Sea, can significantly move prices.

South Africa has become increasingly reliant on bitumen imports, that according to market sources, suggest now account for nearly 80% of its needs. All but one of the country’s bitumen refineries have closed including the 180,000 barrel per day Shell BP/Sapref joint venture plant in Durban. That only serves to increase vulnerability to freight rate volatility, but underscores the opportunity to be a valuable supplier to the region.