SunSirs: Summary of China Asphalt Market Trends

According to the Commodity Market Analysis System of SunSirs, from January 29th to February 4th, the price of asphalt in Shandong Province first increased from 3,585 RMB/ton and then dropped to 3,586 RMB/ton, with an overall increase of 0.04%, a month on month increase of 3.46%, and a year-on-year decrease of 8.96%. Driven by the rise in international crude oil prices, refineries have seen significant cost support, with some regions experiencing price increases. The widespread rain and snow weather has hindered the demand for essential goods, and the downstream terminal demand in the north and south is weak, with basic contract warehousing being the main focus. The asphalt market is showing a state of weak supply and demand, and the situation of price but no market is gradually emerging.

On the supply side, as for the main production enterprises, Xinjiang Fakangni currently has no production plans, Shandong Shengxing and Shandong Jincheng have suspended asphalt production, and Yunnan Petrochemical has intermittently suspended production. The comprehensive operating rate of the asphalt industry has decreased compared to the previous month, which has a positive impact on the supply side.

On the cost side, in terms of crude oil, international crude oil futures have experienced three consecutive declines within the same cycle. As of the close on February 2nd, the settlement price of Brent crude oil futures main contract was $77.33 per barrel, a decrease of $1.37 or 1.7%. The weekly chart showed a significant decline, with WTI crude oil falling by 7.35% and Brent crude oil falling by 6.78%. Record the largest weekly decline since early October last year. The main reason is the bearish outlook for US interest rate cuts and the easing of geopolitical tensions in the Middle East.

On the demand side, as the Spring Festival holiday approaches, downstream rush demand is gradually decreasing, with concentrated transactions of low-priced resources in the market. Overall demand is weakening, and market trading is average. The demand side of the asphalt market is bearish.

As of the close of February 1st, the petroleum asphalt futures market has fallen. The main asphalt contract 2403 opened at 3,736 RMB/ton, with a highest price of 3,747 RMB/ton and a lowest price of 3,696 RMB/ton. It closed at 3,707 RMB/ton in the last trading day, a decrease of 29 RMB/ton, a decrease of 0.78% compared to the previous trading day's settlement. The trading volume was 127,085 lots, and the position was 208,053, with a daily increase of -1,907.

In the future market forecast, as the Spring Festival holiday approaches, the demand for asphalt spot will gradually weaken. However, considering the limited supply of refinery resources, some inventories will remain low, and the overall market will be in a situation of weak supply and demand. SunSirs asphalt analysts predict that the domestic asphalt market will remain stable in the short term.

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