The world’s largest oil traders are scraping the bottom of the barrel in search of their next big opportunity.
Vitol Group and Trafigura Group’s Puma Energy are adding ships and storage to trade bitumen, a thick, syrupy petroleum product used to make asphalt for roads and tar for roofs.
Transport of the material, traditionally by truck, train, or barge from refineries to local builders, has swelled into a global marketplace as demand climbs far from the source of production.
The fight for profits from bitumen, said to come from the “bottom of the barrel” because of its weight, has been driven by fundamental changes in the market.
Supply has dropped as aging refineries in Europe and the US are closed or converted, while road construction in Asia and Africa has pushed up consumption.
That’s created demand for massive oceangoing tankers that keep the material heated.
“It used to be mostly a small distribution business,” Chris Bake, a senior executive at Rotterdam-based Vitol, said. “Now it is a whole arbitrage business requiring a global reach.”
Vitol, the biggest independent oil-trading house, is well-placed to meet the demand. It’s the largest bitumen trader after teaming up in March with US-based transporter Sargeant Marine.
Their Valt venture has a fleet of 16 bitumen and asphalt ships, some of which can handle shipments of more than 35,000 metric tons.
Puma, a Singapore-based unit of Trafigura, recently added four bitumen vessels and is targeting emerging Asian. The company’s 11-strong fleet can carry about 165,000 tons.
“We see a definite upward trend in the number of nautical miles for bitumen,” said Valt chief commercial officer Nick Fay, who estimates an annual increase of about 7%. “All the new refineries that are getting built don’t make bitumen,” he said.
Global annual demand is about 100 million tons, according to Mr Fay, and less than 20% of that is currently shipped by sea in fewer than 200 ships.
Through its VTTI subsidiary, Vitol owns the ATPC refinery in Antwerp, Belgium, one of the largest dedicated bitumen plants in Europe with a processing capacity of 3,300 tons a day. Vitol and Valt also own a bitumen tank in the Port of Rotterdam with a storage capacity of 30,000 tons.
Puma has 500,000 tons of bitumen storage.
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