Recently, asphalt futures have gradually stabilized after a decline. During the crude oil rebound in early December, asphalt showed weaker upward momentum compared to other petroleum products. Conversely, when crude oil stalled and retreated on December 8, asphalt's decline was less pronounced than other oil-based commodities. In the medium to short term, crude oil is likely to maintain a weak oscillation pattern. The $61–$65/bbl trading range established by Brent crude since October remains a relevant reference point. Currently, bulls lack sustained upward momentum and room for expectations, while bears continue to dictate market rhythm.

Winter Stockpiling Policy Pending

Logically, crude oil has yet to develop a breakthrough driver. Macroeconomic conditions present a mildly neutral outlook: global interest rate cuts continue but lack robust expectations; regulatory reforms in major economies exhibit lagging effects. Thus, current macro logic primarily serves to shore up sentiment and temper pessimistic forecasts. Fundamentally, demand remains relatively subdued. There is currently no clear motivation for OPEC to further adjust production, nor has the market reached a window for speculating on improved demand. The negative feedback loop of oversupply has not yet fully transmitted to prices. Geopolitically, the bearish expectations surrounding the rapid and comprehensive implementation of the Russia-Ukraine peace plan have weakened, and issues related to Venezuela have not triggered excessive market attention or trading activity. Overall, the market has re-entered a wait-and-see phase.

Comprehensively, the crude oil market will likely maintain a weak, fluctuating pattern in the near to medium term. Without cost-side drivers, after completing off-season pricing, the asphalt market's focus will likely shift to the interplay between structural support and winter stockpiling dynamics.

As the core variable for the winter asphalt market, winter stockpiling has seen tentative policy signals emerging. Entering December, winter stockpiling quotes from some refineries in Xinjiang, Shandong, and other regions have been around 2800-2900 yuan/ton, near five-year lows. This price is reasonable relative to refineries' current cost floor of approximately 2700 yuan/ton, which is a key reason for the recent stabilization of asphalt futures and spot prices.

Market feedback indicates that while refinery profits remain relatively stable, potentially supporting their willingness to release winter stockpiles, actual surveys reveal a pronounced bearish sentiment toward crude oil trends. Refineries have not locked in long-term raw material costs.

Consequently, this year's winter stockpile release volume is unlikely to see significant growth, likely remaining largely unchanged from the total volume at the end of 2024. Against this backdrop, market focus on winter stockpiling has shifted from price to profit margins and operational flexibility. Should subsequent releases prove insufficient or short-lived, spot price floors may still weaken before the peak demand season arrives. The market must reassess how crude oil market dynamics and price volatility in the first half of next year will impact asphalt refinery costs.

In the near to medium term, the implementation of winter stockpiling policies remains the market's primary focus. Adequate price concessions could stimulate phased inventory replenishment demand, thereby supporting spot prices. However, compared to previous years, the magnitude of price increases and the sustainability of the market trend remain highly uncertain.

Strong Uncertainty on the Demand Side

Over the past two months, domestic asphalt futures and spot prices have cumulatively declined by nearly 600 RMB/ton. Current prices now exhibit some valuation support relative to costs. From a price ratio perspective, the asphalt futures-to-Brent crude ratio hit a low of approximately 0.89, while the spot-to-Brent crude ratio also briefly fell to around 0.88. While this level hasn't reached seasonal extremes, it has entered a reasonable range given this year's manageable supply pressures and overall healthy inventory levels. Particularly as winter stockpiling price anchors begin to take shape, the market's previously excessive pessimism has eased.

Should winter stockpiling prices be formally established, their rebound magnitude may be influenced by macroeconomic conditions and demand patterns. Nevertheless, this logic is likely to gain market acceptance. Overall, the structural support from the asphalt crack spread and basis differential has taken shape, establishing a sound trading rationale.

Despite a seasonal increase in asphalt supply amid weak December demand, the rise remains limited and industry operating rates persist at historically low levels. Although refineries retain some profit margins, these have been significantly compressed following nearly two months of sharp spot price declines, making it difficult to increase output. Furthermore, factory inventory rates have remained at multi-year lows since the beginning of the year, while social inventory drawdowns have proceeded smoothly, with current social inventory rates now returning to a relatively reasonable range. Overall, the asphalt supply side maintains a healthy state.

Uncertainty stems more from the demand side. 2026 marks the opening year of the 15th Five-Year Plan. It is anticipated that both the local bond environment and infrastructure investment will maintain a moderately positive trajectory, which is expected to provide some support for asphalt demand in the first half of the year.

As an integrated internet platform providing benchmark prices, on December 15th, the benchmark price for asphalt, according to SunSirs, was 2956.67 RMB/ton, a decrease of 1.11% compared to the beginning of the month (2990.00 RMB /ton).

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