February Shandong Asphalt Market First Declines Then Rises

February 27 News

In February 2026, the asphalt market in Shandong, China, showed a "first decline then rise" fluctuating trend. Affected by seasonal factors of the Spring Festival, changes in supply and demand, and cost support, prices were under pressure before the festival and stabilized and rebounded after the festival. Spot prices followed the adjustments in futures, with the overall price level slightly increasing for the month.

Before the Spring Festival: The market is under pressure, and prices are fluctuating downward.

In early February to the Spring Festival (around February 10), Shandong asphalt is in the traditional off-season, with weak supply and demand leading to a price decline. On February 2, the main asphalt futures contract adjusted downward by 169 CNY/ton (a 4.87% decrease), pulling the spot price down from 3,350 CNY/ton to around 3,300 CNY/ton before the holiday.

Supply side: China's asphalt production is expected to be 1,936,000 tons (down 3.2% month-over-month and down 6.5% year-over-year), with Shandong independent refineries producing 1,023,000 tons (down 3.3% month-over-month). Due to raw material constraints, some refineries have switched production, coupled with pre-holiday maintenance, the capacity utilization rate is 28.08%, indicating no supply pressure.

Demand is the core of the downturn: During the Spring Festival holiday, construction activities stalled, and the operating rates of downstream industries plummeted (2% for road modified asphalt, 5% for waterproofing membranes). Traders are adopting a wait-and-see attitude, leading to sluggish transactions and weighing on spot prices.

Before the holiday, inventory accumulation (still at a low level compared to the same period) was combined with a narrowing of asphalt processing profit to 34.57 CNY/ton, leading to weak price support from refineries and pushing prices downward.

After the Spring Festival: Demand recovers, and prices stabilize and rise.

After the holiday (after February 13), the market rebounded, and the recovery in futures prices drove a corresponding rise in spot prices. The main contract rose from 3,280 CNY/ton to 3,348 CNY/ton (a price increase of 2.07%), fluctuating between support levels of 3,300 and 3,380 CNY/ton, which in turn supported the spot market.

Supply side: Shandong refineries are gradually resuming production, the discount on Venezuelan oil has narrowed (from $13 per barrel to $5 per barrel), and the expectation of improved raw materials has raised the cost support price.

Demand recovery is the core of the rebound: As temperatures rise, resumption of work has increased, and both end-user purchases and inventory buildup by traders have grown. Coupled with low inventory levels and tight spot supply, this has pushed prices up to 3,300 CNY/ton, with a basis of -57 CNY/ton.

Cost side: Crude oil prices are rising supported by geopolitical factors; the profit margin between asphalt and coke is widening, reducing refiners' willingness to switch production, while stable supply is helping prices rebound.

Looking at the market in February, the "initial decline followed by a rebound" was mainly due to the transition between the off-season and peak season, coupled with support from futures and costs, resulting in a "V-shaped" fluctuation. Looking ahead to March: refinery production is expected to resume at a faster pace, leading to increased supply pressure; demand will be supported by the resumption of infrastructure projects, which will underpin prices, and it is expected that there will be an upward trend with fluctuations. However, there is a need to be cautious of the risk of a pullback.