Cost Support July Shandong Asphalt Market Rises

July 31st News

The rise in crude oil prices in July was beneficial for the asphalt market, with the asphalt market in Shandong, China, increasing. According to monitoring data, on July 1st, the factory price of heavy traffic asphalt #70 in the Shandong region was 3,670 CNY per ton, and by the 31st, the ex-factory price in the Shandong region had risen to 3,727 CNY per ton, an increase of 1.54%.

From a cost perspective, the increase in the prices of raw materials such as crude oil has led to higher production costs, providing some support. In terms of inventory, due to the impact of typhoons, shipments from some refineries have been restricted, leading to inventory accumulation at the plants.

From the supply perspective, the operating rate of 92 asphalt refineries in China is 35%, an increase from the previous period. The monthly production is 2,400,000 tons. In July, the operating rate of asphalt plants was at a medium level over the past five years, indicating a relatively sufficient supply.

From the demand side, high temperatures and rainfall have affected road construction in some areas of China, leading to slow progress in terminal projects. The overall demand for asphalt is relatively low, and downstream users and traders are being cautious.

Looking at the fundamentals of asphalt, the overall situation of weak supply and demand may continue. Factors such as funding constraints and rainfall affect the release of terminal demand. On the supply side, production rates are likely to remain stable, with operating rates at mid-levels compared to recent years. However, inventory levels remain relatively low without showing signs of accumulation, indicating limited short-term pressure on the market. Nevertheless, asphalt continues to lack upward momentum.