SunSirs: The Price of Asphalt in Shandong Province Was Mainly Declining in September

Price trend

Since September, asphalt prices have been fluctuating downward due to a variety of factors. According to data from SunSirs, the ex-factory price of heavy traffic asphalt #70 in Shandong Province was 3,680 RMB/ton on September 1st, and 3,593 RMB/ton as of the 29th.

Analysis review

Ample raw material supply in September led most local refineries to maintain high production activity, driving a month-on-month increase in overall asphalt production last week. Last week, the capacity utilization rate of China's 92 asphalt refineries was 42.0%, a 5.7% increase from the previous month. Asphalt production reached 701,000 tons, a 15.5% increase from the previous month. Competition for resources among brands remained fierce, and asphalt supply pressure remained high. Asphalt production plans are expected to remain high in October, with total domestic asphalt production reaching 2.682 million tons in October.

On the demand side, concentrated rainfall and typhoons in parts of China had hindered end-user demand, resulting in stronger asphalt demand in the north and weaker demand in the south. In Shandong, increased supply and rain-damaged demand have led to a significant inventory buildup. Domestic asphalt inventories at 104 suppliers totaled 154.1 tons. In Northeast China, a narrowing construction window and price cuts by traders had led to a price advantage for asphalt inventories. Combined with demand for rush jobs, this had accelerated destocking.

Market outlook

From the perspective of SunSirs, the recent significant increase in asphalt production in the fourth quarter may put greater pressure on prices after the peak season ends and break the relatively strong pattern of asphalt this year. Therefore, the market outlook for asphalt prices in the fourth quarter is bearish.

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