June 8th: Shandong Asphalt Supply Declines, Market Continues to Rise

June 8th, news:

Recently, the overall trend of the Chinese asphalt market has been strongly upward, driven by reduced production and maintenance at refineries, leading to a significant decrease in supply. The market supply has fallen to a new low, highlighting a structural imbalance between supply and demand, which has pushed asphalt prices continuously higher. The overall situation is characterized by tight supply and firm prices.

Recently, the Chinese asphalt market has shown a pattern of low supply and high price increases. The market supply has once again hit a historical low, with both spot and futures prices continuously rising. Data shows that the current comprehensive capacity utilization rate of Chinese asphalt manufacturers is only 13.6%, a record low, with a significant week-over-week decrease in production. Overall, the available spot resources are extremely scarce.

The core reason for the significant supply contraction is the concentrated maintenance of refineries in multiple regions, coupled with some units switching to produce residual oil. Additionally, refineries are experiencing processing losses, leading to low production willingness. In June, the planned production of local refineries in China has significantly declined both year-over-year and month-over-month. On the demand side, there is a divergent trend. With improving weather in the northern regions, infrastructure and road construction are progressing steadily, and downstream rigid demand procurement is warming up, providing strong support for prices.

Currently, the market supply and demand imbalance continues. Although the rainy season in southern China has to some extent suppressed terminal construction, the overall demand remains resilient. In the short term, the low supply situation of asphalt is unlikely to improve quickly, and the shortage of goods will continue. It is expected that market prices will remain at a high level with fluctuation.