SINGAPORE: Some road construction companies are facing mounting delays and rising costs as global supply disruptions tighten access to bitumen – a key material used in paving roads and airport runways.
Some contractors told CNA prices have surged by as much as 60 per cent in recent months, while supply shortages have forced firms to seek alternative sources and delay projects by up to a few months.
The crunch stems from ongoing disruptions to global crude oil flows linked to conflicts in the Middle East, particularly affecting the heavier grades of crude needed to produce bitumen, according to industry players.
For many contractors in Singapore, securing sufficient bitumen has become increasingly challenging in recent months.
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Local firm United E&P said its bitumen supply fell by around 50 per cent in March, creating what it described as the worst disruption since the COVID-19 pandemic.
“We do a lot of projects, mainly for public roads and also runways,” said its general manager Koh Chan Swee.
“So in a sense, we need to speak to the agencies and also our customers on which projects we must prioritise.”
The firm has explored sourcing bitumen from suppliers in China to plug supply gaps, but said costs remain prohibitively high for now.
It is also hoping a government co-funding scheme for bitumen purchases will be extended beyond this month as market pressures persist.
Analysts warned that the supply bottleneck is unlikely to ease anytime soon.
Ms June Goh, senior oil market analyst at Sparta Commodities, said only certain heavier crude oil grades can produce bitumen that meets industry specifications.
“These flows are now totally shut off,” she said, adding that the challenge is also compounded by competing refinery priorities.
“There is a hard choice to make – whether to make bitumen or to make fuel oil – and fuel oil is also required in the market.”
As traditional supplies tighten, some companies are looking at alternatives.
Singapore-based startup Magorium has developed an alternative road-building material made from plastic waste.
Recent demand for the material – called NEWBitumen – has more than tripled both locally and across the region.
The company said it is now running at full capacity and working to expand production.
“Bitumen comes from crude oil, plastics also come from crude oil,” said the firm's co-founder Oh Shu Xian.
“The idea is that because we are already generating this plastic as waste, it is something that we can then recover and then reverse engineer it back into another crude oil derivative and use it again in a second life,” she added.
“With traditional industries, I guess a lot of the processes have been tried and tested for a long period of time, so there's a more conservative nature in terms of trying things that are new.”
But she noted that the supply crunch has created an opening for newer and more resilient alternatives.
For now, Magorium’s material still needs to be blended with traditional bitumen to meet Singapore’s road specifications.
However, the firm said it is continuing its research and development efforts to eventually create a standalone substitute.
Continue reading...
Some contractors told CNA prices have surged by as much as 60 per cent in recent months, while supply shortages have forced firms to seek alternative sources and delay projects by up to a few months.
The crunch stems from ongoing disruptions to global crude oil flows linked to conflicts in the Middle East, particularly affecting the heavier grades of crude needed to produce bitumen, according to industry players.
PLUGGING SUPPLY GAPS
For many contractors in Singapore, securing sufficient bitumen has become increasingly challenging in recent months.
CNA Games
Show More Show Less
Local firm United E&P said its bitumen supply fell by around 50 per cent in March, creating what it described as the worst disruption since the COVID-19 pandemic.
“We do a lot of projects, mainly for public roads and also runways,” said its general manager Koh Chan Swee.
“So in a sense, we need to speak to the agencies and also our customers on which projects we must prioritise.”
The firm has explored sourcing bitumen from suppliers in China to plug supply gaps, but said costs remain prohibitively high for now.
It is also hoping a government co-funding scheme for bitumen purchases will be extended beyond this month as market pressures persist.
Analysts warned that the supply bottleneck is unlikely to ease anytime soon.
Ms June Goh, senior oil market analyst at Sparta Commodities, said only certain heavier crude oil grades can produce bitumen that meets industry specifications.
“These flows are now totally shut off,” she said, adding that the challenge is also compounded by competing refinery priorities.
“There is a hard choice to make – whether to make bitumen or to make fuel oil – and fuel oil is also required in the market.”
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EXPLORING ALTERNATIVE MATERIALS
As traditional supplies tighten, some companies are looking at alternatives.
Singapore-based startup Magorium has developed an alternative road-building material made from plastic waste.
Recent demand for the material – called NEWBitumen – has more than tripled both locally and across the region.
The company said it is now running at full capacity and working to expand production.
“Bitumen comes from crude oil, plastics also come from crude oil,” said the firm's co-founder Oh Shu Xian.
“The idea is that because we are already generating this plastic as waste, it is something that we can then recover and then reverse engineer it back into another crude oil derivative and use it again in a second life,” she added.
“With traditional industries, I guess a lot of the processes have been tried and tested for a long period of time, so there's a more conservative nature in terms of trying things that are new.”
But she noted that the supply crunch has created an opening for newer and more resilient alternatives.
For now, Magorium’s material still needs to be blended with traditional bitumen to meet Singapore’s road specifications.
However, the firm said it is continuing its research and development efforts to eventually create a standalone substitute.
Continue reading...