June 30 news
In June, the overall trend of the Shandong asphalt market in China was first rising and then falling, with the characteristic of "sharp increases and gentle declines." The price increased slightly within the month. At the beginning of the month, the factory price of #70 heavy traffic asphalt was 3,625 CNY per ton, and by the end of the month, it was reported at 3,673 CNY per ton. The phased market trends were clearly differentiated, but the overall fluctuation was manageable.
Early in the month, both costs and demand in China increased, driving prices up.
In early June, market prices rose strongly, driven by dual support from both the cost and demand sides. At the beginning of the month, geopolitical tensions in the international arena intensified, stoking concerns about crude oil supply and pushing up international oil prices, thereby increasing asphalt production costs. Meanwhile, rainfall in Shandong Province came to an end, allowing infrastructure and road maintenance projects to resume work in a concentrated manner, steadily releasing downstream rigid demand. Coupled with relatively low operating rates at refineries, the market supply tightened, boosting trading activity. Traders became more active in securing supplies, driving asphalt prices to surge and reach a temporary peak.
In the middle to late part of the month, costs decreased along with weak demand, leading to a weaker market.
Mid-month, geopolitical tensions eased, and concerns over crude oil supply dissipated, leading to a significant pullback in international oil prices, which thoroughly weakened the cost support for asphalt. The weakening futures market fueled bearish sentiment. On the demand side, the persistent weakness became more apparent, with slow construction activity downstream. Enterprises mostly replenished their inventories as needed in small quantities, without any concentrated restocking, resulting in insufficient follow-up of rigid demand. Meanwhile, the previous price increases led to traders selling for profit, increasing the supply of goods in the market, and exacerbating the mismatch between supply and demand, further weakening the market. As a result, asphalt prices in Shandong continued to fall from their peak, with refineries proactively lowering prices to promote sales. Market transactions became quieter, and by the end of the month, prices had fallen back to the upper range at the beginning of the month.
June market strictly followed the industry rule of cost-driven fluctuations and demand-determined amplitude. The pattern of low refinery operation and low supply persisted throughout the month, providing a solid bottom support for oil prices, limiting the downward space in the middle and late month, and preventing a significant market collapse. The core factor for the shift between increases and decreases within the month was the sharp fluctuation in international crude oil prices. The insufficient resilience of terminal demand amplified the market weakness, ultimately forming a monthly pattern of first rising then falling.
Short-term international crude oil prices are fluctuating at high levels, providing alternating support and pressure on the asphalt market. The tight supply situation of asphalt in Shandong is expected to remain unchanged in the short term, limiting the downward space for prices; however, the recovery of terminal demand is slow, and the cautious purchasing mentality of downstream buyers is unlikely to change quickly, leaving the market without a unidirectional upward momentum. Overall, it is expected that regional asphalt prices will experience narrow-range fluctuations and weak performance, mainly following the changes in the crude oil market, while also relying on positive support from the actual implementation of terminal engineering projects.
Looking at the July asphalt market in Shandong, the trend is likely to continue with high pressure and a range-bound fluctuation, presenting an overall pattern of "support at the bottom and pressure from above," with the core operating range expected to be between 3550-3850 CNY/ton. On the cost side, geopolitical premiums are gradually being eliminated, and international crude oil lacks upward momentum, making it difficult to sustainably drive up asphalt prices. The support from high-cost inputs for spot prices is weakening, and the room for price increases is continuously being compressed.
The supply side continues to show a trend of low-level contraction. In July, the production plans of Chinese refineries continue to decline. Major refineries in Shandong maintain low load and low inventory operations, resulting in a relatively small overall volume of goods in circulation. Additionally, some refineries are limiting their shipments, which gives the spot market a strong resistance to price drops, effectively supporting market prices and reducing the likelihood of a significant decline. The demand side is the core restrictive factor. In July, Shandong enters a season of high temperatures and frequent rainfall, limiting the frequency of outdoor road construction and making it difficult for terminal demand to be fully released. Downstream traders and engineering units will continue to follow a just-in-time purchasing model without large-scale stockpiling plans, so the demand side is unlikely to provide upward momentum.
Overall, the supply and demand in Shandong's asphalt market in July is in a weak balance, with cost pressures. The market trend is unlikely to show a one-sided directional movement. If crude oil experiences a short-term rebound, spot prices will follow with a slight increase, but the sustainability of the upward trend will be weak. If crude oil prices decline, given the low inventory and low supply situation, the price decrease will be relatively limited. The overall trend will mainly be characterized by range-bound consolidation, and a turning point in the market will depend on the concentrated construction demand during the peak season.
