May Shandong Asphalt Market Ranges Within a Narrow Trading Band

May 29th, according to reports

In May 2026, the spot price of heavy traffic asphalt in Shandong, China, showed a narrow range fluctuation without any one-sided increase or decrease. The mainstream quotation for the entire month ranged from 4360 to 4410 CNY per ton, with a monthly fluctuation of only 50 CNY per ton. In the first ten days of the month, a slight rebound in crude oil prices led to a small increase in asphalt prices. In the middle of the month, continuous rainfall in the province caused road construction to halt, which suppressed demand and put pressure on prices, leading to a decline. In the last ten days, weakening crude oil prices combined with a small inventory release by refineries pushed prices to a new low. However, strong support from low inventory levels maintained the price within the range, and by the end of the month, the price was still fluctuating within the same range.

Supply side: Refineries are undergoing concentrated maintenance, leading to a continuous shortage of supply. In May, the main asphalt refineries in Shandong underwent concentrated maintenance, with Lianqiao's facility remaining shut down and Xinhai's facility stopping operations. Only a few facilities resumed production, keeping the regional asphalt operating rate at a low level, with an average weekly operating rate of only 20.4%, a significant decline compared to the same period last year. Coupled with deeply negative asphalt production profits, refineries have a strong desire to control and reduce production. Regional factory and social inventories continue to decrease, leading to a tight supply of spot goods, which firmly supports the price bottom and limits the potential for a deep decline in the market.

On the demand side: Rainfall has hampered construction activities, and end-user demand remains weak. In May, demand was the key negative factor suppressing asphalt price increases. From mid-to-late May, Shandong experienced multiple rounds of rainfall, causing large-scale suspensions of outdoor road paving and maintenance projects, leading to a sharp drop in end-user demand. Market transactions showed a trend of high in the early period and low in the later period: in the first half of the month, favorable weather conditions prompted concentrated restocking by contractors, supporting sales volumes; however, from mid-to-late May, both traders and construction companies adopted a wait-and-see attitude, with buyers and sellers operating on a spot-by-spot basis without any speculative stockpiling. As a result, end-user demand lacked the strength to absorb the upward pressure on prices.

Crude oil fluctuations are driving short-term volatility, leading to a divergence between futures and spot prices. International crude oil experienced wide swings in May, serving as the primary driver of short-term price fluctuations in asphalt. However, constrained by locally weaker fundamentals, asphalt spot prices have shown a much lower degree of change compared to crude oil, with weak cost transmission. On the futures market, prices closely follow crude oil movements, exhibiting greater sentiment-driven volatility. Meanwhile, Shandong’s spot prices closely track local inventory levels and actual rigid demand, resulting in a divergence between futures and spot trends and further solidifying the volatile pattern in the spot market.

In June, rainfall in the province will gradually come to an end, and road construction will resume in a concentrated manner, with terminal demand expected to recover; at the same time, refineries have no plans for resumption of production, and supply remains tight. It is expected that in June, the asphalt market in Shandong, China, will show a slightly stronger trend with a small upward shift in the price range, but overall it will still be difficult to break away from the oscillating market, with a low probability of significant increases or decreases. In May, the asphalt market in Shandong was significantly characterized by range-bound fluctuations, influenced by both low supply providing a floor and weak demand capping prices, along with the absence of a one-sided trend in crude oil prices. The key points to watch for future market trends will be the strength of the recovery in demand after the resumption of work and the direction of international crude oil prices. These two factors will determine whether the market can break through the current oscillation range.