Asphalt, the dark brown to black thick mixture of heavy hydrocarbons, is a byproduct or residue in the crude oil refining process. It has applications mainly in the construction of roads and highways, runways in airports, parking bays, pedestrian paths and in port infrastructure. Need for more such infrastructure projects is a boon for the asphalt plants market to grow in the coming years.
Government has announced investment of more than Rs 102 trillion across various infrastructure projects in the next five years. For the road sector alone, the government is investing Rs 2 trillion this year. The amount of investment for the next year will increase to Rs 3 trillion. Within the next five years, the total government spend on the road infrastructure will be about Rs 17 trillion. This is going to see momentum in rural roads as well as state and national highway construction. The infrastructure investment plans will also include development of airport and port infrastructure. All these will see more requirement of asphalt mix in large quantity.
Currently, there are over 1,000 asphalt batch mix plants in India and the country is going to be the fastest growing region with a CAGR of 4.90 per cent, as per ICRA estimates. Asphalt mixing plants are widely used in tunnels, highways, bridges and road construction projects. According to Ashok Tanna, Managing Director, Ardent Maschinfabrik, the booming automobile industry in Asia Pacific, particularly in China and India, will be placing greater demand on countries' roads, which will eventually increase road construction and repair projects in this region. The stable outlook for the construction sector in 2020 would ensure inflows for construction companies with a huge pipeline of projects in the infrastructure sector."
He is also optimistic about the market in the near future, "The delays in land acquisition, funding issues, and state government priorities that posed threat to new order inflows will be eliminated leading to India's rapidly growing economy registering a stupendous growth in the next five years." Asphalt plants, in particular, would account for a major boost since with the growing urbanisation, the number of roads and highways are also increasing, mounting construction across the country, which is likely to upsurge the demand for construction machines, in turn fuelling the demand for mobile asphalt plant.
Earlier, the global asphalt mixing plants market for road construction industry had registered at over $5.5 billion in 2016, while Asia-Pacific held a major chunk of global asphalt mixing plants market and, in 2016 it had generated revenue more than $2.5 billion. After China, which is expected to maintain the largest production and consumption status, India will be a key player. "The investment by companies into mobile compact batch-mix plant which can process reclaimed asphalt pavement in excess of 50 per cent is gaining rapidity" says Tanna.
Asphalt plants and demand trends
There are three major types of asphalt plants according to the user pattern: hot-mix asphalt plants, hot-mix plants with recycling and plants with recycling and warm mix. There are also different varieties of these asphalts for summer and winter use. Hot asphalt is the type that you mostly see when driving past a construction crew. Recycling plants are plants that recycle the milled material from the existing pavement into the plant and are re-laid as hot asphalt. Recycling with warm mix (foamed mix) is good for the environment as the warm mix can be laid at lower temperatures and saves both fuel and the fumes released to the atmosphere. Tanna elaborates on the demand trend, "Since asphalt plants are highly convenient and are ready-to-use instantly due to pre-wiring of the chassis which enables the plant to easily and quickly shift to different construction sites. In India, the government has target for construction of 10,000 km national highway in FY19, which has triggered tremendous demand. Many projects in the construction of state highways, national highways, and expressways are going to be doubled which will fuel the demand for higher capacity plants."
According to Ratan Lal Kashyap, Senior Vice President-Procurement, GR Infraprojects, India needs to address the huge infrastructure deficit that has existed since independence. He adds, "Apart from more national highways under the Bharatmala programme, the demand for all-weather roads for better port-hinterland connectivity, as well as for linking them with major highways, border roads, coastal roads, etc, has driven the demand for asphalt plants." In spite of the recent push for concrete roads, Kashyap sees equal demand for asphalt roads. "Earlier, the policy makers favoured concrete roads because the longevity of concrete roads was considered to be high but now it's realised that asphalt roads are equally good. Asphalt demand has increased as it can be recycled better than concrete. Greater energy efficiency and automation, environment-friendliness and lower cost of operations, as offered by our asphalt plants, are expected to find very good acceptance in the market," he says.
On the demand trends he further adds, "Currently, most of the projects awarded by NHAI are flexible pavements so there is good demand in asphalt plants after the government announcement of huge investment in road sector. Depending on the type of project, the type and capacity would vary. The capacity would vary from 120 tonne to 240 tonne per hour."
On the application and demand trends in asphalt, SP Rajan, Head-Plant and Machinery (Roads, Runways & Elevated Corridors), L&T Construction observes,"Realising the importance of long-life and sustainable pavements, recent contracts are specifying perpetual pavements and long-life pavements. While the preferences for concrete and asphalt pavements keep changing, India is already realising the delicate balance it needs to have between development and judicious use of materials. With the incorporation of concepts like perpetual pavements, the asphalt demand for a km of road length is going to increase by about 1.5-2.5 times than that of conventional pavements. This means we will be paving almost double the volume, thus necessitating increased material consumption, plant capacities and supply chain logistics."
Tanna adds on the new trends, "The latest development is warm asphalt mix production. Addition of plastic pellets and SMA has led to the release of a new range of products as options to asphalt plants in the market. This, in turn, has resulted in the redesign and modification of asphalt plants, to cater for these new methods and to guarantee that the quality of the final product is, at the very least, equivalent to the quality of traditional hot mixes. By forging new alliances and acquiring technologies required for making such machines have been used and tested in the extremes of conditions and have passed each assignment with flying colours."
Meeting customer needs
Asphalt plant suppliers provide various features to meet the customer demand for the emerging requirements. Tanna says,"We see a lot of opportunities because of the machinery are being upgraded from a drum-mix to batch-mix. Besides using the asphalt-recycling technology going forward, the vision is to produce any asphalt using reclaimed asphalt in the range from 0-100 per cent. Another global trend in asphalt production points towards lower mixing temperatures with warm-mix asphalt technique. The 100 per cent asphalt-recycling plant is in R&D stage as there are challenges with the state of current pavement in most locations in India. We are developing asphalt mobile plants in higher capacities to fulfill the growing needs of advanced technology and cost-effectiveness. Mobile asphalt plant works with higher efficiency, offers commendable flexibility and exhibits quick production in comparison to stationary asphalt plants. Mobile plants are highly convenient as they become ready-to-use instantly due to pre-wiring of the chassis which enables the plant to easily and quickly shift to different construction sites."
The whole world is facing the adverse impacts of emission and global warming. Also, availability of naturally occurring aggregate sources are depleting rapidly. All these demand for sustainable and environment-friendly practices in various construction projects. Tanna elaborates, "Environmentally friendly and sustainable commercial and industrial business practices are essential in today's world. We provide low NOx and low SOx burners in plants which help decrease total emissions by 30 per cent, while having no impact on production. Asphalt today can be a rather greener choice for commercial and industrial paving needs, and can be considered an eco-friendly, sustainable paving solution. In addition to some of the benefits mentioned above, warm mixes of asphalt used during construction can be even beneficial to the environment as warm mixes require less energy to produce. Use of plastics in the preparation of asphalt mix is gaining popularity and is a green solution for the environment."
According to Kashyap, GR Infraprojects is one of the first Indian companies introduced the use of new construction technologies and construction methodologies which have brought in value in terms of quality, cost, faster execution, and reuse of reclaimed material at site, which has resulted in saving the environment. "We have been using reclaimed asphalt pavement (RAP) based on the trials and test parameters as per the site condition. Most of the plants owned by us are equipped with RAP ring drier drums where RAP materials can be fed as per design usage. Also, we have cold RAP feeding mechanism in all the plants. Based on the availability of RAP material, use of RAP features in asphalt plant is operative."
Rajan stresses on the importance of bringing in sustainability into the system. "As a nation, we need to embrace sustainability and build it into our engineering and construction DNA. Typically, we look forward to any material to be cost-effective, be environmentally responsible and be able to perform well in given conditions. We have finite resources and the infrastructure we are building today will have to be recycled 'there is no choice. Circular economy and sustainability are the drivers for ensuring our existence. With this principle in mind, the use of RAP needs to be mandated and supported by research and advancements in materials technologies. In parallel, the emphasis on relevant quality management is essential. While there is a long-term gain to the society and nation, the contracts need to incorporate and commensurately accommodate the operational costs.
It is like rewarding a long-term investment adequately. At the same time, plant manufacturers need to bring adaptable technologies for suitably modifying the older asphalt plants to encourage the use of RAP."
Challenges and opportunities
Effective sales network is important to reach out to the customer requirements and fulfilling the needs. Tanna elaborates on the challenges and how the company is overcoming these bottlenecks, "One challenge that we always face is the development of sales network. We also need a proper infrastructure for transportation and cartage for which important arrangements such as ramp to reach retail segment are a must. Besides, development of fabrication/spares base region-wise with our dealer GMMCO will help reduce logistics cost. Our technically superior bought-parts and design make clients perceive us as a higher price brand compared to competitors which is quite the contrary." On the challenges related to product, technology and finance, he adds, "We offer our products at a very competitive price. While materials, technology, transportation, labour, and funding are challenges that always plague our industry. Practical challenges such as surface cracking in asphalt concrete are a major failure mechanism that develops over the pavement service life. Another common challenge of crack sealing is the optimal timing of application of this treatment."
On the opportunities he observes, "Since the use of asphalt is the highest in road construction, development of roads sector will have a positive impact on asphalt. More than 85 per cent of the roads in the country use asphalt due to a number of environmental and technical benefits. Also, as more sustainable option to recycle and reuse, bitumen is majorly used in roads and many infrastructure projects such as ports and airports. Thus, there are loads of opportunities coming our way."
The global demand for asphalt in 2019 was projected to grow 2.8 per cent per year-on-year to 122.5 million tonne (742.5 million barrels). In the emerging global bitumen market, demand is expected to reach more than 150 million tonnes by 2020, while India will lead the pack in bitumen consumption. Tanna explains,"Increasing road construction activities in the fast growing markets of India and China will be the main growth drivers of the bitumen market in Asia. It is commendable that to ensure long life of road projects, Indian refiners have begun producing viscosity grade, polymer modified bitumen, emulsifiers and other value-added bitumen. The major investors in the asphalt mobile plants are increasingly focusing on the development of a compact, single-drum counter flow technology, which can process RAP in excess. In the coming years, mobile asphalt plants will offer many benefits like enhanced production capacity, better efficiency, and super flexibility with elevated protection from chemical attack, to builders, engineers, contractors and other end-users."
According to Kashyap, strong growth outlook in the construction industry has charted a profitable roadmap for asphalt mixing plants market over the coming years. "The increase in demand for asphalt is being significantly driven by the repair and construction segment that builds the world's asphalt driveways, tunnels, highways, bridges, and airport runways. The importance of good highways for infrastructure development has strongly agitated the growth of asphalt mixing plants industry in several countries. Many asphalt mixings plant players are adopting sustainable green technology and environment-friendly raw materials to combat the pollution problems associated with asphalt mixing plants. This is set to create huge growth opportunities for the industry players to develop sustainable and eco-friendly materials with regards to asphalt mixing and grab lucrative growth avenues over the coming years."
On the asphalt plants market in the country, he says,"Looking back at the last few years, there were very good quality asphalt manufacturers in India. Looking at the increased demand and infrastructure growth, many more reputed players across the world have started their manufacturing in India. As the concession period of any road project varies from 15 to 25 years, the quality of the road constructed is with a long-term view so that no maintenance or overlay is encountered during concession period."
Rajan sees considerable changes in approach towards measuring the asphalt plant performances. He adds, "The matrices on which we were measuring plant performances are undergoing rapid changes and flexibility to adopt will be the game changer. Future plants will have to be adaptable to varied range of fuels, be adaptable to change of materials, have an in-built artificial intelligence to communicate defects and material inconsistencies, and overall have a lifecycle value of a different nature."
With environment-friendly technologies gaining prominence in the construction industry, recycling will play a major role and asphalt plants that can handle more RAP and waste materials such as plastics along with asphalt will drive the market towards greener future.