2010 AEA CONFERENCE. Stratford on Avon, October First, 2010 BITUMEN MARKET. Carlo Giavarini. SITEB Italian Asphalt and Road Association

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1 2010 AEA CONFERENCE Stratford on Avon, October First, 2010 BITUMEN MARKET Carlo Giavarini SITEB Italian Asphalt and Road Association

2 Bitumen properties & use A UNIQUE, VISCOELASTIC, INERT, STABLE MATERIAL maintaining its properties over long time 100 % RECYCLABLE: when used for pavements it is not consumed VERSATILE: many uses in many forms (as such, as emulsion, foam, blown, modified..) TECHNOLOGIES based on bitumen ARE LESS EXPENSIVE Most important areas of application are: PAVEMENTS (75 80%) AND MEMBRANES (15%)

3 Commercial Roman asphalt sample (ingot) with producer s stamp _ First century Aloni Cai F(ilii) Arn(iensis) Sagittae

4 ONCE A NATURAL PRODUCT, BITUMEN IS NOW PRODUCED IN OIL REFINERIES FROM SUITABLE CRUDE OILS

5 How bitumen is produced ATMOSPHERIC DISTILLATION VACUUM DISTILLATION TO UPGRADING PROCESSES ASPHALTENIC CRUDE HEATER BITUMEN FUEL OIL VISBREAKING & VACUUM VB BITUMEN SOLVENT DEASPHALTING SD BITUMEN AROMATIC OIL

6 Crude oil & Bitumen future availability Proven crude oil reserves are more than 40 times current annual production (about Heavy crudes represent the largest portion of the reserves and yield more bitumen :10% on average Only 2% of crude production is now used for bitumen production There are bitumen reserves for more than 100 years (current demand) Many crudes for bitumen production come from regions such as M.E. and Venezuela (critical( areas) about 65% in Middle East)

7 Crude Oil & Refining Industry worldwide In 2009 the demand of petroleum products is decreased by 4.4% in Ocse countries and increased in non Ocse (+2%). Refining margins are now low or negative in Europe and USA, causing refinery closures and run cuts. New refining capacities are being created in Asia (mostly in India and China) and in the oil- producing countries. Refining trend is towards deep conversion, reducing residues. Bitumen production and demand is decreasing in Europe. Globally, bitumen demand is projected to increase, but production is not always located in major consumption areas. As a consequence, bitumen demand, availability and value are different in various parts of the word.

8 Bitumen growth prospects will vary widely Increasing demand in developing countries, especially China, India, East Europe (new roads construction) Stagnant or decreasing demand in many industrialised countries (Usa, West Europe, Japan) (*) West Europe: decreased demand despite the demand of infrastructures (economic crisis) (*): The demand is influenced by the increasing quantity of recycled asphalt mix (in Europe about 50 Mt/y, or 2,5 Mt/y of bitumen)

9 EUROPE 2008: 2.9% drop in production of hot mix asphalt in the 29 Countries surveyed by EAPA (from Mt in 2007 down to Mt in 2008) Germany 51.0 Mt similar to 2007 France 42.3 Mt similar to 2007 Spain 42.2 Mt - 15% Italy 31.6 Mt - 10% Turkey 26.6 Mt + 20% UK 25.0 Mt -3% Unofficial data 2009 show a much worse situation in many countries

10 EUROPE 2009: further drop in production of hot mix asphalt in many countries 2009 vs vs 2009 (prediction) Germany -6 France -3-5% Spain -10 Italy -8-7% Turkey UK -6-5

11 MAIN EUROPEAN BITUMEN PRODUCERS (about( 60 out of 114 refineries) A Coruña Oporto Alzambuia Sines Vissingen Dunkerque Petit Couronne Paris Reichstett Nantes Sannazzaro Puertollano Lyon Santurce Pernis Gelsenkirchen Valdemoro Hamburg Koln Antwerp Trecate Marseille Tarragona Karlsruhe Bayernoil Heide Busalla Mantova Schwedt Falconara Ravenna Roma Gdansk Leuna Plock Litivinov Pardubice Venezia Zalaegerszeg Kiskunfelegyhaza Ingolstadt Székesfehérvár Bratislava Schwechat Szazhalombatta Pitesti Ploiesti Thessaloniki Castellon Livorno Taranto Asprogyrgos Huelva Cadiz Cartagena Augusta Korintos

12 Bitumen trading is changing Bitumen can now travel long distances Global bitumen market needs improved long distance transportation Special containers are now available for solid bitumen transportation; heating is possible at the end of a journey Big bags are used for relatively hard bitumen Mostly, special tankers ( tons, or more) can transport bitumen on the sea 30 new ships will be ready shortly to increase the fleet of more than 200 tankers now existing (60% in Asia) Freight rates for a cargo shipment from Ravenna to Libya are around $ 55/t New storage capacities are created in coastal areas

13 Truck Loading Tank farm Shipping Container Railcars Refinery Barge Bitumen bags Bitumen tanker Mobile Asphalt Plant Stationary Asphalt Plant Roofing Plant Binder Manufacturing

14 Bitumen transportation in the Mediterranean area It is one of the fastest developing sectors, based on the expansion of the roads and highway networks. The demand of bitumen and other existing products is boomed, especially in the Mediterranean basin where availability of these products for export is limited. At the same time, most North Africa countries are pure importers of these products (not to mention the East and West African regions). A number of small refineries are targeting bitumen production and/or changing owner.

15 11 Refineries (out of 15) produce bitumen in Italy

16 Bitumen production and use in Italy (kt( kt) Total Production Internal Market (*) Export (**) For traditional mix production For polymer modified mix For W.P. membrane Traditional Hot Mix production For emulsion and blown (*) (first quarter): minus 18% (**) - Export increase 2008/2009: +11%

17 Italy. Bitumen production and consumption (kton) 2008 Consumption 65% Export 38,5% Consumption 61,5% Export 35% 2009

18 Production of HMA [Mt] Italy Italy Europe Europe Italy 39,8 39,9 42, ,1 39,9 35,1 31,6 Europe 296,9 297,8 300,6 315,1 320,9 341,7 342,9 333,6

19 The Italian trend seems different respect to other European countries (for example France GPB data)

20 Bitumen market value in a number of places (Argus, dec ) Reference: Italy = 100 low high Rotterdam Spain Texas Coast (USA) Washington St. (USA) Singapore China (import) Bahrein Italy (including tax)

21 Wholsale bitumen prices, fob basis (ARGUS report )

22 Bitumen market value in Italy SITEB INDEX Indice SITEB del prezzo medio del bitume stradale in ITALIA (Indice SITEB 100 = prezzo bitume a genn. 1999) 100 = value of the bitumen in january 1999 One of the main problems for road contractors is the increase in value during the same year. This is common to other Countries

23 Full scenario: picture Reduction in bitumen quantity Investments Balancing of prices bitumen diesel fuel mkt new shift volumes mkt old Economical crisis GAP in infrastructures Bitumen demand unsatisfied Strong demand for infrastructures

24 THANK YOU FOR THE ATTENTION See you in Padova for ASPHALTICA 2010 (22-24 November)

25 CONCLUSIONS Refining is a strategic industry and Europe cannot accept to progressively loose its pieces Bitumen is a strategic material as well. However, we should not forget that, behond certain limits of availability and cost, it could be replaced by other materials A better cohoperation is to be hoped between bitumen producers and users, to analyse the problems of bitumen availability and quality in the inner market. The users should invest more resources in research and innovation in order to add value to the bituminous products The buyer Administrations should learn how to prefer quality and innovation more than low prices for the works