Cost-Side Impact: Asphalt Market Shows Slight Recovery After Prolonged Decline

October 24th, according to reports

This week, the asphalt market in China showed a continued decline followed by a slight rebound on Friday. According to monitoring data, on October 17th, the factory price of #70 heavy-duty asphalt in Shandong region was 3,370 CNY/ton, and by the 24th, the ex-factory price in Shandong had decreased to 3,340 CNY/ton, a price decrease of 0.89%.

Cost-side impacts continued to decline in the first half of the week, but crude oil rose by more than 2% on Friday, boosting asphalt prices under strong cost support. From a supply perspective, since September, supply has been ample, and the overall operating level of China's asphalt production facilities has remained at a relatively high level. Most local refineries have maintained high production enthusiasm, leading to an increase in recent supply pressure. The weekly intermediate asphalt production was about 550,000 tons, a slight decrease of 11,000 tons from the previous week, and an increase of 140,000 tons year-over-year.

On the demand side, as weather conditions in Shandong improve, projects are gradually resuming, leading to a noticeable increase in demand. Nationwide, however, the northwestern region is seeing demand slightly constrained due to cooling temperatures and projects nearing completion. Meanwhile, in the northeastern region, tighter construction windows combined with traders offering discounted promotions have made social inventory resources more price-competitive. This, coupled with heightened demand driven by accelerated project timelines, is helping to speed up the process of reducing inventory levels.

Let's look at the recent situation where the Shandong region has released November delivery contracts, and the market signing situation is decent. As temperatures drop, demand in the northern part of China decreases, while the southern part of China is supported by rigid demand. In the short term, attention should be paid to the impact of crude oil on the asphalt market.