SunSirs: Fluctuations of China Asphalt Market

According to the Commodity Market Analysis System of SunSirs, from March 18th to 22nd, the price of asphalt in Shandong Province increased from 3,589 RMB/ton to 3,600 RMB/ton, an increase of 0.32%, a month on month decrease of 1.18%, and a year-on-year decrease of 2.44%. The strong operation of international crude oil provides significant cost support for refineries, and mainstream market prices remain stable with some upward trend. However, the recovery of spot demand in the asphalt market is slow, with limited trading volume. Some transactions are mainly based on low-priced resources, and overall transactions are inconsistent.

On the supply side, in terms of the main production enterprises, Xinjiang Meihuite has stabilized the production of asphalt and Yunnan Petrochemical has stabilized the production, driving up the utilization rate of refinery capacity in the area. The comprehensive operating rate of the asphalt industry has increased compared to the previous month, and there is a negative impact on the supply side.

On the cost side, in terms of crude oil, high international crude oil prices are considered volatile. In the early part of the week, due to the tense geopolitical situation in the Middle East, there was support; In addition, the expected reduction in production by oil producing countries is also a major factor supporting oil prices, leading to an increase in international oil prices. In the later part of the week, weak data on US gasoline demand and reports on a draft resolution calling for a ceasefire in Gaza by the United Nations have put pressure on oil prices. As of March 21st, the settlement price of Brent crude oil futures main contracts was reported at $85.24 per barrel, a decrease of $0.14 or 0.2%.

On the demand side, the demand for asphalt varies slightly in different regions. The weather in the north is still good, but the terminal demand is slowly recovering. Although the demand in the south has increased slightly, the recovery is not strong. Coupled with the gradual impact of rainy weather, it is difficult to say that the market demand is improving. The demand side of the asphalt market has a mixed impact.

As of the close of March 22, the petroleum asphalt futures market has risen. The main asphalt contract 2406 opened at 3,693 RMB/ton, with a highest price of 3,722 RMB/ton and a lowest price of 3,688 RMB/ton. It closed at 3,706 RMB/ton in the last trading day, up 13% or 0.35% from the previous settlement session. The trading volume was 126,667 lots, with a holding volume of 205,767 lots and a daily increase of 596 lots.

In the future, international crude oil prices are expected to fluctuate at high levels, and there is still support for asphalt costs. The overall supply is expected to decrease, and market demand is difficult to predict a positive trend. SunSirs asphalt analysts predict that the domestic asphalt market will be weak in the short term, with consolidation being the main trend.

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