I. Capacity Utilization Rate and Production Forecast

By 2026, China's asphalt plant capacity utilization rate is projected to decline to 39.9%, a year-on-year decrease of 2.8 percentage points. Total annual production is expected to reach approximately 28.1 million tons, representing a 3.9% year-on-year decline.

Monthly production trends indicate petroleum asphalt output will follow a pattern of low-to-high growth throughout 2026, fluctuating between 2.2 and 2.5 million tons monthly. Initial monthly output is projected to exceed 2025 levels, with only one new capacity unit—Yulongdao Petrochemical—expected to come online. Monthly production estimates will be calibrated based on this facility's actual commissioning timeline.

II. Supply-Demand Dynamics: Overall Balance with Slowing De-Stocking Pace

Supply Side: Stable and Controllable Total Volume

China's domestic asphalt production in 2026 is projected at 28.1 million tons. Combined with approximately 3.33 million tons of imports, total annual supply will reach 31.43 million tons. Concurrently, domestic refineries deepening their oil-to-chemicals transformation have seen reduced asphalt yields, partially alleviating market supply pressure. However, production profit incentives may boost refinery output enthusiasm, creating a dual-impact scenario on the supply side.

Demand Side: Significant Sector-Specific Divergence

Overall petroleum asphalt consumption shows a downward trend, with pronounced variations across downstream sectors:

Road Construction Sector: Consumption is projected at 23.52 million tons, a 1.0% year-on-year decrease. As the inaugural year of the 15th Five-Year Plan, 2026 will see limited new demand from road construction, with minimal fluctuations in end-use construction volumes.

Building Waterproofing Sector: Consumption is projected at 3.67 million tons, a significant 16.0% year-on-year decrease. Affected by the low prosperity of the real estate industry, terminal demand continues to shrink, intensifying industry competition and gradually eliminating some small enterprises from the market.

Coking Ship Fuel Sector: Consumption is projected at 3.36 million tons, an 8.7% year-on-year increase. A price differential exists between asphalt and coking feedstock, allowing some asphalt resources to be diverted to the marine fuel coking sector where profit margins are higher, driving demand growth in this segment.

Supply-Demand Gap and De-stocking Pace Based on comprehensive supply-demand calculations, China's petroleum asphalt market is projected to have a supply-demand gap of approximately 1.02 million tons in 2026, reflecting an overall trend of excess supply. The core industry contradiction lies in the mismatch between the pace of phasing out outdated capacity and accelerating consumption decline, directly slowing inventory reduction. However, seasonal patterns suggest significantly stronger inventory drawdowns in Q3 and Q4, gradually balancing supply and demand.

III. Impact of Supply-Demand Dynamics on Market Prices

Asphalt market pricing in 2026 will be directly driven by supply-demand dynamics:

On the demand side, the core influencing factor is the scale of investment in construction and infrastructure projects.

On the supply side, factors such as crude oil price fluctuations and adjustments to refining capacity will exert constraints.

Compared to 2025, the supply-demand imbalance in the asphalt industry is expected to ease in 2026. The supply-demand gap will exert stronger guidance on prices, and seasonal price fluctuations will become more pronounced.

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