China’s Belt & Road & Other Key Trends in the Global Asphalt Market Through 2024

China’s massive Belt and Road Initiative continues to fuel investment in strategic infrastructure development to connect China to Europe, the Middle East, and parts of North Africa for commercial and tourism purposes, with additional plans for other global regions, notably Latin America.

Despite near-term slowdowns in spending due to the Covid-19 pandemic, and ample criticism of Belt and Road’s feasibility and long-term returns, the sprawling project is creating significant opportunities for global asphalt suppliers, according to a new Freedonia Group analysis, which projects global asphalt demand to grow 2.4% per year through 2024. In addition to Belt and Road, global market gains will be driven by key trends in the dominant paving market, such as:

  • other government efforts to expand paved road networks in large, developing countries such as India and Indonesia
  • increasing maintenance spending in mature markets such as the US and Western Europe.

In the sizable (though much smaller) roofing market, asphalt sales will be supported by global building construction activity as the Covid-19 pandemic recedes and economies and construction levels renormalize.

Belt & Road’s Expanding Reach Aiding Paving Asphalt Demand in Growing Number of Countries

China’s Belt and Road plans comprise six economic corridors:

  • New Eurasian Land Bridge, which connects Western China to Western Russia
  • China-Mongolia-Russia Corridor, which connects North China to Eastern Russia via Mongolia
  • China-Central Asia-West Asia Corridor, which connects Western China to Turkey via Central and West Asia
  • China-Indochina Peninsula Corridor, which connects Southern China to Singapore via Indo-China
  • China-Pakistan Corridor, which connects South Western China through Pakistan to Arabia sea routes
  • Bangladesh-China-India-Myanmar Corridor, which connects Southern China to India via Bangladesh and Myanmar

Completed, these corridors would span some 80 countries, including many on the original “Silk Road” of centuries past. The prevalence of developing countries with lacking paved road networks along China’s planned route will support asphalt demand growth the Belt and Road project progresses. Russia in particular is a key partner due to its geographic importance to realizing many of the project’s goals.

However, the initiative is also buoying demand in more developed markets, such as Italy, a significant recipient of Belt and Road funding to improve its rail and highway systems.

Rising Investment in Paved Road Networks Driving Robust Market Growth in India & Indonesia

In addition to Belt and Road, rapid growth in the development of highway systems in India and Indonesia will bolster paving asphalt demand gains in the Asia/Pacific region:

  • By 2024, India will overtake Turkey as the world’s the fastest growing asphalt market in the world, as the country is building highways and paving rural roads at a rapid pace. For instance, India’s significant highway spending is expected to result in 587,000 kilometers of new paved roads through 2024.
  • Indonesia is among the fastest growing asphalt markets in the world. A large portion of the roads in the country are unpaved or paved with gravel, but the country has made efforts to improve transportation infrastructure, particularly on more heavily used roads, to aid economic development. For instance, Indonesia plans to build 4,500 kilometers of toll roads by 2030 to boost revenue for future highway construction projects.

Mature Infrastructure & Weak Construction Hinder Growth in North America, Western Europe

Through 2024, asphalt demand in mature markets in North America and Western Europe will be restrained by the maturity of local infrastructure networks as well as slow anticipated recoveries in construction activity in many countries as the Covid-19 pandemic recedes. Though demand will be supported in these markets by regular highway repaving and steady reroofing activity (particularly in the US, where asphalt shingles and other bituminous roofing are popular in both residential and nonresidential applications), opportunities are expected to be limited.

For instance, in the US:

  • Demand for paving asphalt is expected to rise only marginally through 2024 due to the concentration of US paving activity in improvement and repair.
  • In 2019, the US was the largest roofing asphalt market in the world. Although it will maintain that position through 2024, market maturity and a decline in nonresidential building construction is expected to cause demand for asphaltic roofing products to stagnate.

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About the Author:

Peter Kusnic is a Content Writer with The Freedonia Group, where he researches and writes studies focused on an array of industries.