On June 15, the domestic asphalt market saw a rapid unwinding of the geopolitical risk premium that had accumulated earlier, triggered by news of a memorandum of understanding reached between the US and Iran. Futures prices plummeted, while spot prices showed divergent regional trends. The overall market landscape was characterized by futures leading the decline, spot prices showing resilience, weak supply and demand, and a strong basis. While the logic supporting the peak season for road construction remains, rainfall in the south is suppressing short-term demand, and there are expectations of production resumption following a recovery in refinery margins. With bullish and bearish factors intertwined, the market is primarily undergoing a correction and consolidation phase.

I. Futures and Spot Price Performance and Regional Trends

Today, asphalt futures and spot prices diverged significantly; futures reacted more sensitively to external news, whereas spot prices demonstrated resilience based on market fundamentals.

In the futures market, the BU2609 contract opened with a downward gap, hitting a low of 4,200 yuan/tonne during the session and closing at 4,196 RMB/ton. This represented a single-day drop of 6%, effectively erasing all gains made since early June, with the easing of geopolitical tensions serving as the primary catalyst for the sharp decline.

Spot market movements varied by region, with overall volatility far lower than that of futures and regional price spreads remaining within normal ranges. Mainstream market prices in Shandong and North China stood at 4,550 RMB/ton, reflecting a 1.1% decline and a flat trend, respectively. East China spot quotes held steady at 4,960 RMB/ton. The South China market price was 4,870 RMB/ton, down 1.2%. Prices in the Southwest and Northeast regions rose slightly to 4,880 RMB/ton and 4,780 RMB/ton, respectively—increases of 0.62% and 0.63%. The Northwest market price remained stable at 4,570 RMB/ton.

Regarding the basis structure, spot prices are currently significantly higher than futures prices, maintaining a strong basis. Industry consensus suggests that after futures have fully priced in the bearish sentiment, spot prices are expected to undergo a synchronous, minor correction, though the potential for a deep decline remains limited. Market trading is driven primarily by essential demand, while speculative purchasing sentiment has cooled.

II. Supply Side: Short-term Output Dip; Expectations of Resumed Production Rise

Data for the week ending June 12 shows total domestic asphalt production at 203,000 tonnes, a week-on-week decline of 10%, indicating a short-term contraction in supply. Recent sharp pullbacks in international oil prices have lowered crude procurement costs for refineries, leading to a simultaneous recovery in asphalt production margins.

With expectations for the reopening of the Strait of Hormuz and the restoration of crude oil supplies materializing, refinery production enthusiasm is set to rise gradually; asphalt operating rates and output are expected to rebound later on. Currently, refineries have no plans for concentrated maintenance or large-scale shutdowns, and overall supply flexibility remains adequate; the supply-demand dynamic is shifting from short-term contraction to steady volume growth.

III. Demand Side: Peak Season Disrupted by Rain; Shipments Decline Week-on-Week

Although the domestic market is currently in the traditional peak season for road construction, widespread rainfall in the south has significantly disrupted outdoor projects, weakening short-term asphalt demand. Last week, asphalt shipments from a large sample of domestic enterprises totaled 187,200 tonnes—a 12% week-on-week drop—as the pace of procurement by end-users slowed.

Regionally, construction conditions in the north remain relatively stable, providing decent support from essential demand, whereas the south has seen increased project suspensions and a marked reduction in procurement volumes. In the medium to long term, the fundamental demand for domestic infrastructure and road maintenance remains unchanged; the rainfall represents only a temporary disruption, and the core logic driving peak-season demand holds firm, with a recovery expected once weather conditions improve.

IV. Inventory Status: Overall De-stocking; Inventory Pressure Eases Slightly

As of the week ending June 12, the combined total of domestic refinery and commercial asphalt inventories stood at 1.018 million tonnes—a 4% week-on-week decline—indicating continued inventory reduction across the market. This trend is driven by the ongoing consumption of existing stocks to meet essential demand, alongside the inventory-reducing effect of the short-term supply contraction.

Current asphalt inventory levels fall within a reasonable range; there is no severe overstocking, which provides some support for spot prices. However, as refineries resume production and supply increases, the risk of inventory re-accumulation will rise if demand fails to keep pace. V. External Environment and Industry Chain Dynamics

The turning point in the current market trend stemmed primarily from the memorandum of understanding reached between the US and Iran. As geopolitical tensions in the Middle East eased and expectations grew that the blockade of the Strait of Hormuz would be lifted, international oil prices plummeted. The entire energy and chemical sector weakened across the board; asphalt futures were the first to react to the bearish news, rapidly shedding the price premium that had previously been driven up by geopolitical tensions.

Over the past two weeks, asphalt has generally outperformed crude oil, with the asphalt crack spread climbing steadily to a high level. During the phase driven by geopolitical sentiment, capital favored smaller-scale commodities like asphalt and fuel oil; coupled with fundamental support from the peak demand season, asphalt’s gains outpaced those of crude oil. As geopolitical risks subsided and oil prices retreated, asphalt prices pulled back in line with the broader market; however, the decline was limited by essential demand and inventory levels, resulting in a divergence between futures and spot prices.

VI. Outlook

The market will continue to digest the pullback in sentiment regarding geopolitical tensions, with futures prices likely to fluctuate with a downward bias and spot prices edging down in tandem. However, given the strong basis, low inventory levels, and support from peak-season demand, a sharp drop in prices is unlikely.

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