SunSirs: Affected by Crude Oil, the Asphalt Market Was Hard to Stop Falling

Price trend

Since October, the asphalt market has plummeted. According to data from SunSirs, the ex-factory price of heavy traffic asphalt 70# in Shandong province was 3,583 RMB/ton on October 1st. As of October 17th, the ex-factory price in Shandong province was 3,370 RMB/ton, a drop of 5.95%.

Analysis review

Since September, the supply had been abundant, and the overall operating level of China's asphalt production facilities had remained at a medium-to-high level. Most local refineries maintained a high level of production enthusiasm, resulting in an increase in supply pressure in recent times. In terms of output, as of the 17th, domestic asphalt production reached 624,000 tons. It is expected that the planned production of asphalt in October will remain high. The total domestic asphalt production in October was 2.682 million tons.

On the demand side, rainfall and typhoon weather were relatively concentrated in some parts of the country, which had hindered terminal demand. In Shandong, due to increased supply and rainfall suppressing demand, inventory accumulation was more obvious. In Northeast China, due to the narrowing construction window and traders' price cuts and promotions, the price advantage of social inventory resources had become apparent. Combined with the support of rush work demand, the destocking process had accelerated.

From the cost side, crude oil performed steadily since September, but had shown a clear downward trend since October, mainly due to relatively pessimistic expectations for the macroeconomic trend. Consumption remained relatively weak in the fourth quarter. Overall, there was a lack of upward momentum for crude oil, and it showed a weaker trend.

Market outlook

From the perspective of SunSirs, the recent operating logic of the asphalt market mainly followed crude oil, but considering that there is still an expectation of incremental demand in the near future, asphalt will enter a stabilization stage after a wave of downward movement.

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