SunSirs: China Domestic Asphalt Market surged and operated in July

According to the Commodity Market Analysis System of SunSirs, the domestic asphalt market surged in July. From July 1st to 27th, the average price of asphalt producers in Shandong Province increased from 3,767 RMB/ton to 3,854 RMB/ton, an increase of 2.30%. The maximum amplitude for the month was 2.71%, and the price decreased by 9.57% year-on-year.

At the beginning of the month, international crude oil was operating strongly, with some support for asphalt costs. However, the overall supply remained at a high level. Hebei Kaiyi Petrochemical planned to produce finished products and Jincheng Petrochemical planned to resume production, resulting in regional demand differentiation. The demand in the northern region was supported, while there was more rain and gas in the eastern China region along the Yangtze River. The actual demand was average.

In the first half of the month, boosted by favorable factors such as rising crude oil prices, relatively low supply, and tight available resources, the domestic asphalt market prices slightly increased.

In the latter half of the month, Typhoon "Taili" hit, causing some precipitation to increase and affecting downstream demand. In the short term, the market may show a strong demand in the south and weak demand in the north, and the asphalt market situation will be sorted and operated.

On the cost side, the crude oil market surged in July, and WTI crude oil reached its highest point in the past three months. The settlement price of the Brent crude oil futures main contract was $82.74 per barrel, an increase of $1.67 or 2.0%. The oil market has been boosted by the expected tightening of supply and continued fermentation, as well as the rebound in demand. As of July 26th, the Federal Reserve announced a 25bp interest rate hike, coupled with a lower than expected decline in US crude oil inventories, resulting in profit taking in crude oil futures and pressure on prices. The high cost of international crude oil market is favorable for the domestic asphalt market.

On the supply side, in terms of major production enterprises, KPC maintained low load production, Dalian Jinyuan had no production plan, and the intermittent production and production reduction of main refineries in East China led to a decline in the operating rate of units in the region. Hebei Kaiyi's stable production, Dongfang Hualong's resumption of normal production, Shandong Shengxing's stable production, and Yunnan Petrochemical's stable production have led to an increase in the operating rate of units in the region. The comprehensive operating rate of the asphalt industry has increased month on month, with negative impacts on the supply side.

On the demand side, the asphalt market demand is relatively flat, with varying demand in different regions. In some northern regions, future rainfall weather may increase, affecting the construction process of downstream terminals. However, the overall demand in the south has improved, and the phased demand may show a strong situation in the south and weak situation in the north. The demand side of the asphalt market has a relatively stable impact.

As of the close of July 27th, the petroleum asphalt futures market has declined. The main asphalt contract 2310 opened at 3,782 RMB/ton, with a maximum price of 3,798 RMB/ton and a minimum price of 3,735 RMB/ton, and closed at 3,787 RMB/ton. Compared to the previous trading day, it fell by 1%, a decrease of 0.03%, with a trading volume of 275,018 lots, a holding volume of 273,212 lots, and a daily increase of -24,616 lots.

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