Streets not paved with gold

“When it becomes serious, you have to lie,” said Jean-Claude Juncker about secret meetings held to discuss the eurozone crisis. But the president of the EU could also have been commenting about government spending in Europe on construction projects.

Money has been promised in many countries, but has proved slow to materialise. This has hit demand for bitumen hard, at a time when Europe remains oversupplied with too much of the bottom of the barrel product.

Indeed at the Argus Europe Bitumen conference in Istanbul last week it was the UK that came in for the most praise for making promises and then actually delivering on them.

At this place where Europe and Asia meet, the pitfalls discussed were not just the endless traffic jams and wayward taxi drivers, but the dearth of demand for bitumen across much of Europe.

Vice-president of bitumen at Total Eric Gosse said: “In France, €4bn is planned for highway maintenance, but there are doubts about whether it will be spent.

“In western Europe, the issue is about road maintenance and financing it; the Germans have the money but don’t want to spend it.

“The Germans have very big spending plans on infrastructure, but the money is not really being spent,” he added.

By contrast, “in the UK, it’s just going ahead and happening — there’s no talk, just action”.

High praise indeed from our French colleagues — but it points to a wider malaise across much of Europe regarding road maintenance and construction budgets.

The lack of funds being released for road projects — promised or not — is keeping bitumen demand at the lowest level for many years with prices seriously depressed with it. Dutch domestic prices are at the lowest since May 2009, with little sign of recovery this year.

Last year was considered a disaster by many bitumen suppliers, but this year looks set to be worse. One of the largest French construction firms reckons bitumen requirements have dropped by 18pc so far this year — following a 20pc fall for 2014.

In Germany official data show bitumen consumption down 12pc for March compared with a year previously. One producer reckoned demand for bitumen was 10-15pc lower for the first half of the year compared with 2014.

To make matters worse for sellers, there is plenty of bitumen to go round, despite the raft of refinery closures in Europe in the past five years or so. Cheap imports are coming from the likes of eastern Germany, Poland and the Czech Republic. This is undercutting many western European producers, making the production of bitumen often a marginal or loss-making economic exercise.

Finding new markets is the key to solving Europe’s surplus of bitumen and supplies have been seen heading from Europe to Asia-Pacific, as well as from the Mediterranean to Latin America. But bitumen does not travel well and such routes are expensive and require larger vessels, which are often in short supply.

Promises are easy to make and hard to keep. Those looking for demand growth in western Europe have already written off this year are now looking to next year for any hope of demand recovering. With so much political uncertainty and only stuttering economic recovery, you can forgive Europe’s refiners for remaining circumspect until any promises become a reality.