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SunSirs: China Domestic Asphalt Market Saw a Unilateral Decline in November
December 04 2023 10:08:21SunSirs(Selena)

According to the Commodity Market Analysis System of SunSirs, the domestic asphalt market experienced a unilateral decline in November. From November 1st to 30th, the average producer price of asphalt in Shandong Province dropped from 3,806 RMB/ton to 3,442 RMB/ton, a decrease of 9.55%, and the price decreased by 4.88% year-on-year.

At the beginning of the month, the asphalt market was slightly lackluster, with some resource quotations stabilizing but falling. Also, due to environmental protection, inspection, and inspection factors, market demand was relatively average, and some contracts had high enthusiasm for shipment. Enterprise quotations were mostly at a low level.

In mid month, the main reason for the decline in asphalt prices was the significant drop in international crude oil, which weakened cost support. Coupled with the two consecutive price reductions of the main production enterprise Sinopec, some regions experienced a decline in asphalt prices. The market was mostly dominated by low-priced transactions, and brand competition was fierce.

In the latter half of the month, international crude oil continued to decline. Although there was occasional rebound during this period, the support was not strong, coupled with two consecutive price increases from major production enterprises. At the same time, there was obvious competition for brand resources, and some implemented volume price preferential policies. However, downstream demand was relatively weak, and the asphalt market continued to decline.

As the end of the month approaches, demand in some regions is almost stagnant, and prices are mainly focused on making up for the decline. Overall, the downward trend of asphalt spot prices is not limited.

On the cost side, in terms of crude oil, the international crude oil futures market was weak and volatile in November. At the beginning of the month, the strong performance of the US dollar will have a certain inhibitory effect on oil prices. In mid month, the market showed some fatigue due to the tense geopolitical situation in the Middle East, and the crude oil supply in the Middle East region was not significantly affected in the short term. The market focus is gradually shifting to the weakening demand outlook that may be brought about by the Federal Reserve's interest rate hike. In the latter half of the month, international crude oil futures plummeted, mainly due to a significant increase in US crude oil inventories, and more importantly, weak economic data exacerbating concerns about future demand. Overall, crude oil prices are in a weak position.

On the supply side, the main production enterprises have increased production in Panjin Beili and Hebei Xinhai, and resumed production in Qicheng. The comprehensive operating rate of the asphalt industry has increased month on month, with negative impacts on the supply side.

On the demand side, the demand for asphalt in the market is relatively stable, with varying performance in different regions. The northern region has gradually come to a close, but actual rigid demand has steadily declined. In some southern regions, rigid demand has improved, providing some support for low-priced resource shipments. The demand side of the asphalt market has a mixed impact.

As of the close on November 30th, the main asphalt contract 2402 was opened at 3696 RMB/ton, with a highest price of 3,711 RMB/ton and a lowest price of 3,661 RMB/ton. It closed at 3,690 RMB/ton in the last trading day, an increase of 38 RMB/ton or 1.04% compared to the previous trading day's settlement. The trading volume was 150,778 lots, and the position was 157,001 lots, with a daily increase of -10,167.

In terms of future market forecast and supply, the overall resource supply is relatively abundant; The low price competition for asphalt spot on the demand side is obvious, and the contradiction between supply and demand in the market is prominent. The asphalt analyst from SunSirs predicts that the domestic asphalt market will be weak in the short term, with consolidation and operation being the main focus.


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