SunSirs: "Slow Rise", "Fast Fall", The Rise and Fall of China Asphalt Market in 2022

According to the monitoring of SunSirs, the domestic asphalt market in 2022 rose sharply in the first half of the year. After a narrow decline in prices in the third quarter, the deadlock was sorted out for a long time, and then the price market "plunged" until the winter storage news landed at the end of the year. The asphalt price at the beginning of the year was 3.191 RMB/ton, and the price at the end of the year (as of December 21) was 3.504 RMB/ton, up 9.81%. The highest price of the year was 4819 RMB/ton on June 9, with the maximum amplitude of 51.02%.

The asphalt market rose more than fell in the whole year, especially in the first half of the year, which rose continuously for several months. However, in the middle of the fourth quarter, the price fell in a "cliff like" manner, with a significant decline, and it was only slightly warmer in the last few days of the year. The asphalt market in 2022 is mainly divided into three stages:

The first stage is the first half of 2022. From the beginning of the year to June 9, the domestic spot asphalt market price can be described as "unilateral upward", "straight up to the sky", and the spot price has reached the highest level in nearly five years. In the first half of the year, the production cost of asphalt enterprises was high, the processing profit was seriously narrowed, and the processing enthusiasm of refineries was poor. The utilization rate of domestic asphalt capacity was only 26.8%, 17.5 percentage points lower than that of the same period. The shortage of supply promoted the continuous rise of spot asphalt prices. At the same time, demand began to recover in the middle and late April, road construction in various regions was actively promoted, and the international crude oil price rose at a high level. Under the favorable fundamentals, until June, the asphalt price rose to the annual high.

In the second stage, from June 10 to the end of October, the asphalt price fell and was frozen. In the third quarter, the crude oil fell sharply, the refinery's production profit was rapidly restored, and the output increased rapidly. In the case of high supply, the manufacturer Duowei maintained de stocking, but the asphalt price fell slightly under the support of just demand. At the same time, the asphalt futures market ran at a high level, which formed a certain support for the spot market. After the asphalt spot market fell, the deadlock was settled for a long time.

In the third stage, in November, the demand for asphalt entered an obvious slack season, and the demand of all regions declined. The temperature in the north has been descending, and the cold current is coming one after another, so the construction conditions are obviously limited. At the same time, due to the tight funds for the early projects in the southwest and other regions, the construction is still limited despite the dry season. At the same time, Sinopec, a major producer, started the price reduction mode all over the country to guide the market price to follow the decline, and the asphalt market continued to be weak. With the arrival of December, the annual asphalt winter storage curtain was opened. After the implementation of the winter storage policy, the spot price of asphalt in China has also rebounded.

It can be seen from the trend chart of inventory and price correlation of asphalt production plants and the trend chart of social inventory and price correlation of asphalt that the asphalt price is inversely proportional to the asphalt inventory. When the asphalt inventory is high, the asphalt price is mostly low; When the asphalt inventory is low, the asphalt price is mostly high. It can be seen that the inventory is a major factor affecting the domestic asphalt market.

Future market forecast: From the perspective of raw materials, the latest US CPI data reflects that inflation pressure has eased, and the Federal Reserve may weaken its interest rate hike in December to stimulate the rise of crude oil prices. The rebound of crude oil price highlights the rising cost of asphalt and drives the overall trend of asphalt. In terms of supply, the capacity utilization rate of domestic asphalt enterprises was 31.6%, down 2.0 percentage points month on month. Individual refineries in North China and East China have stopped production and reduced production, driving down the overall capacity utilization. In terms of demand, after the public health event was released, East China and other regions experienced a year ago rush, and the recent shipment volume increased significantly. After the implementation of the winter storage policy, asphalt prices in various regions in China have rebounded to varying degrees, mainly due to the rising cost of raw materials and a small rebound in demand. In the short term, the strong trend of asphalt can still be maintained in the short term, but with the completion of the project before the festival, the domestic demand for asphalt slows down, and the asphalt price is expected to return to a low level.

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