SunSirs--China Commodity Data Group

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SunSirs: China Asphalt Market Rose First and then Fell

January 06 2023 10:56:50     SunSirs (Selena)

According to the monitoring of SunSirs, the asphalt market price rose first and then fell. From January 3 to 5, the average price of asphalt producers in Shandong Province rose from 3,806 RMB/ton to 3,809 RMB/ton, up 0.09%, 7.76% month on month and 17.75% year on year. Before the New Year's Day holiday, crude oil rose sharply, supported by the favorable asphalt fundamentals, the market spot resources were tight, and the prices in various regions were boosted by low refinery inventories. However, the crude oil weakened after the holiday, and some low price goods flowed out in some periods, driving some quotations down.

On the cost side, international crude oil declined by a narrow margin. On January 5, the benchmark price of WTI crude oil of SunSirs was US $76.93/barrel, a decrease of -1.87% compared with January 1 (US $78.40/barrel). The short-term supply pressure is heavy, the demand side is also weak, and the oil market may maintain a weak trend in the near future. In the medium and long term, the demand side faces negative macroeconomic feedback suppression. However, with the increase of OPEC+ production restriction policy or adjustment efforts, the impact of the decline in Russian oil exports will play a role. Supply and demand will seek to rebalance, and oil prices still have the opportunity to rebound. In general, the international crude oil price has a negative impact on refinery fundamentals, and the asphalt cost is short term negative.

On the supply side, the supply continued to decrease this week, mainly due to the reduction of refinery production in eastern and southern China. Some main refineries and South China individually refined and re produced asphalt, which led to a small increase in supply, but the overall spot resources were relatively tight.

On the demand side, the available resources of the Southern Refinery decreased, mainly consuming inventory, and shipping decreased. In the south, there is still some demand for expediting, while in the north, operators are hoarding more goods, and refinery inventories may remain low.

In the future, it is predicted that due to the decline of international crude oil, the asphalt price in some parts of China will become loose, and due to the mentality of buying up rather than buying down, some businesses will hold a wait-and-see attitude, and the actual transaction will weaken. SunSirs asphalt analysts predict that China domestic asphalt market may weaken slightly in the short term.

 

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