Overview of the Bitumen & Sulphur Industry
The bitumen and sulfur markets are related industries but also very separate. These two products are the result of refining and 95% of sulfur production is the byproduct of bitumen refining. The uses of these two products are completely different. While Bitumen is primarily used for asphalt roads, more than half of sulphur is used in foods. Canada is currently the world's largest bitumen producer and holds about 40% of the world's reserves and is also the largest sulphur exporter. Each can be found around the world in different locations. While China is the biggest importer of each, it is beginning to make to produce its own bitumen and export it.
The demand for bitumen includes asphalt paving primarily, but there is also need in roofs and some secondary uses. These uses for bitumen are because of its usage at elevated temperatures. Bitumen is retrieved through a vacuum distillation process of specifically selected crude oils. Primary locations for use are Asia and Pacific (37%), United States (25%), European Union (17%), Europe (11%), South America (7%), and Africa (3%).
The world typically consumes about 35 billion barrels per year and there is currently about 5500 billion barrels of oil in the bitumen world reserve. This is enough to last well over a 100 years. Canada holds the majority of the reserves at 40%.
Africa is currently importing bitumen from Europe and estimates expect that to continue at 700,000-800,000 tons per year. They are currently having it imported into Tunisia and Morocco. The country is also having a planned shutdown of specialty products units in its refinery for a period of one year which could increase bitumen imports.
Germany saw a 4% percent decrease in bitumen usage in 2017, down to 1.61 million tons in the first 9 months. It was expected to rise in usage in 2017 from planned government infrastructure budgets but huge delays were a result of the decrease.
The United Kingdom, unlike Germany and Africa, saw a rise of 10% in bitumen import and usage at 1.19 million tons in the first 3 quarters of 2017.
In the past, Canada was the main supplier of sulphur, and while that has leveled out they will always be able to produce sulphur as they produce nearly 2 million pounds per year with bitumen oil sands. The current leaders in the exporting of sulphur are Abu Dhabi, Saudi Arabia, Iran, Qatar, Kazakhstan, and Russia.
China is the largest user of sulphur at nearly 12 million tons per year. It is estimated that the world will need 70 million tons per year by the year 2020. Although with the proposed consumption tax the country plans to levy on its residents, this may drop usage dramatically. Beijing levied a consumption tax in 2008 and it curbed fuel oil imports drastically. It is expected that China will drop from its 12 million tons per year.
Sulphur production is expected to decrease with the International Maritime Organization's sulphur cap on marine fuels. In addition, refiners are lowering residual output due to pressures being placed upon them to find low-sulphur fuels. The price of sulphur could see a surge because of lower production levels.
Bitumen is typically used in paving and roofing because it can be elevated in temperature and the material can be used in conjunction with other liquids to be molded and formed however seen fit. These are its only uses though, it has over 100 uses including disinfectants, mulches, fence post coating, tank protection, insulating fabrics, caulking and cement compounds, levee protection, reservoir linings, dance pavilions, gymnasiums, playgrounds, and many more.
India made an announcement in December 2017 to make sure more than 90% of the roads are made with bitumen and it will increase regulations for the production and supply of bitumen in the country. The country is working with Japanese investors to set up a fund for roadway projects.
Sulphur is produced from the processing of oil and gas. Without this production, the world's agricultural output would dissipate and the electronic world we live in today would not exist. Nearly 55% of sulphur is currently used in food production and another 35% in nickel, uranium and industrial process recovery. What's left is used in the manufacturing of computers, cell phones, medical imaging devices, solar cells, wind turbines and other electronics equipment.
The largest importer of sulfur is China, and then Morocco and the United States are the next largest.
Low oil prices are a cause of concern for bitumen production in Canada. In 2016, crude oil protection fell about 16% which also affected bitumen production as it also dropped 3% to only 897 million barrels produced in Alberta, Canada. Bitumen was used for nearly 50% of the total energy produced in 2016 and it is estimated to increase to 60% by 2026. Canada was shipping out 2.82 million barrels per day and are expected to jump to 4.58 million barrels per day by 2026.
In December 2017, Beijing's Jinling plant was able to ship its first load of 15,700 tons of bitumen production to Hawaii. China typically imports the product but was down in 2017 by about 8% year-over-year at 4.24 million tons. Its exports of the product are up around 287,000 tons in the first 10 months of 2017.
The 2018 forecast for bitumen production in Europe is estimated to have a surplus as domestic demand sees no increases of yet, although the U.S. is expected to see closures in its Louisiana refinery and it is anticipated it will also exit the U.S. Gulf market as well. Europe is hoping to pick up this lag in bitumen needs from the United States. Of the 115 oil refineries in Europe, 74 of them produce bitumen.
Iran saw exports of 2.2 million tons of bitumen in the first 7 months of 2017. This is 17% more bitumen, but at a 6% decrease in price. The countries main destinations are UAE, Myanmar, Pakistan, Qatar, Oman, India, and China. The entire year of 2016 showed 3.3 million tons exported. Iran accounts for about 4% of the bitumen production in the world.
Nigeria awarded a contract to Ondo to begin producing bitumen in the country. They stated they have a reserve of 42 billion barrels. They currently import about 600,000 tons of asphalt per year and are spending billions of naira to have it imported.
Canada is the leading world exporter of sulphur. About 65% of the sulphur in Canada is produced in Alberta with most of it being shipped out of the country. The sulphur is produced from bitumen upgrading and sour gas processing. Minor amounts are achieved through recovery in refineries. The province saw a 6% decrease year-over-year from 2016 compared to 2015. It only produced 3.7 million tons in 2016. Russia and Saudi Arabia are the next biggest exporters of sulphur. All 3 countries export the majority of the sulphur to China.
Elemental sulphur can be produced all over the world wherever sour gas and oil is produced. These include the United States, Canada, the Former Soviet Union, and West Asia.
In summary, we have shown the general market demand for bitumen and sulphur. As you can see, both are a consolidated market with manufacturers throughout the world. While Canada does retain about 40% of the bitumen reserves, it is produced in many other countries in the world. China appears to be the biggest user of bitumen, although the threat of the consumption tax will most likely decrease the importing of as much of the product into the country. It is also increasing its own production of bitumen as well. Sulphur is primarily exported from Canada. China is the largest importer of sulphur followed by Morocco and the United States.