Chinese Asphalt Market Sees Limited Transactions Before the Festival, May Rise Moderately After the Festival

February 13th, News

As the Spring Festival holiday approaches, the asphalt market has officially entered a seasonal adjustment period. The current market trading atmosphere is becoming increasingly quiet, with industry players leaving the market one after another, and logistics activity has dropped to the lowest point of the year. Based on the current supply and demand pattern, cost changes, and historical seasonal patterns, it is expected that the asphalt market will show a trend of "stable conclusion before the festival and a gentle recovery after the festival," and the pace of market recovery after the festival will exhibit significant structural differentiation.

Before the holiday, the market has entered a phase of having prices but no actual transactions: On the supply side, output remains low. Although some refineries in Shandong have plans to resume production, their capacity utilization is picking up slowly. In southern China, major refineries are operating intermittently, with capacity utilization rates hovering around 26%. Refineries, already on the brink of losses, are strongly reluctant to lower prices. Demand has contracted across the board; construction in northern China has come to a standstill, with only sporadic purchases of waterproofing materials. In the south, projects are being rushed to completion, and logistics operations have gradually been suspended, further restricting spot market liquidity. Both factory warehouses and social inventories continue to accumulate, though at a moderate pace, without generating significant downward pressure. As for prices, we expect the mainstream prices to remain stable during the final week before the holiday, with only regions in Shandong and North China—where price increases were relatively large earlier—likely seeing slight easing of 20-30 CNY per ton.

After the Spring Festival holiday, the asphalt market will enter a recovery transition period lasting about three weeks. Based on a comprehensive analysis of supply, costs, inventory, and demand, the market is likely to show a moderate upward trend after the holiday—characterized by higher opening prices, rising transaction prices that follow suit, yet price increases constrained by demand.

Supply side: In February 2026, China's total asphalt production was 1,936,000 tons, a decrease of 64,000 tons from the previous month, a decline of 3.2%, and a decrease of 135,000 tons from the same period last year, a decline of 6.5%. This production level is the lowest in the same period over the past three years, indicating that the overall inventory pressure for refineries after the holiday is manageable. By company type, Sinopec's production was only 370,000 tons, a decrease of 70,000 tons from the previous month, with a particularly significant decline; local refineries' production was 1,058,000 tons, a slight decrease of 5,000 tons from the previous month, with declines in production at Dongming, Shengxing, Jincheng, and Hualong refineries. It is worth noting that after the holiday, refineries need to go through processes such as warming up and debugging, and there is a 3-7 day lag before the actual production volume is released, providing a valuable window for inventory reduction in the post-holiday market. It is expected that the weekly asphalt production in late February will remain below 450,000 tons, and will only see a significant increase in early March.

Cost side: Geopolitical disruptions persist.

Recently, the international crude oil market has been significantly disrupted by geopolitical factors, leading to increased uncertainty in raw material supply. Based on current raw material prices, the overall profit margin for asphalt production has once again turned negative, and refineries’ sensitivity to cost pass-through has further intensified. If geopolitical tensions fail to ease during the Spring Festival holiday and crude oil prices remain range-bound within the current $66–71 per barrel—or even edge slightly higher—major refineries will likely raise their asphalt ex-factory prices after the holiday, with an increase ranging from 50 to 80 CNY per ton. Even if crude oil prices experience a pullback during the holiday period, refineries, supported by low profit margins and reduced production levels, will remain steadfast in maintaining high prices. Thus, cost pressures will continue to be the primary upward driver in the post-holiday market.

Demand side: North-south divergence, gradual recovery.

Post-holiday demand recovery in China will show significant regional and structural differentiation, which is a key variable in assessing post-holiday market price increases.

Southern market (East China, South China, Southwest China): After the Lantern Festival (March 3), road construction will gradually resume. Most downstream projects are focused on existing projects, and the availability of funds will directly determine the pace of resumption. It is expected that from late February to early March, the southern market will mainly focus on restocking for essential needs and fulfilling previous contracts. Traders will purchase according to demand, with most transactions being small orders. In terms of social inventory, the current social inventory in East China and South China has increased for three consecutive weeks. The arrival of imported cargo is relatively concentrated, and there will be some pressure to reduce inventory after the holiday, which may suppress a rapid increase in prices.

Northern market (Shandong, North China, Northeast China): Due to temperature constraints, the demand for road asphalt in these regions typically starts later than in the south, usually waiting until mid-to-late March when the ground temperature rises. However, the demand for waterproofing materials is expected to recover first. It is estimated that by late February to early March, some waterproofing companies in North China and Shandong will gradually resume purchasing, providing a certain channel for the consumption of lower-grade resources from refineries.

On balance, the asphalt market after the holiday is expected to show a moderate upward trend, with opening prices rising by 50–80 CNY per ton, while actual transaction prices will follow suit with an increase of 30–50 CNY per ton. In the East China region, mainstream transaction prices are forecast to range between 3,300 and 3,400 CNY per ton, while in Shandong they are expected to be between 3,200 and 3,300 CNY per ton—representing an upward potential of 30–50 CNY per ton compared to pre-holiday levels. A key risk to watch out for is this: if crude oil prices fall more sharply than expected during the holiday period, or if prolonged rainy weather in southern regions after the holiday continues to disrupt resumption of work, the price increase could narrow or even be delayed.