According to the Commodity Market Analysis System of SunSirs, from May 20th to 27th, the price of asphalt in Shandong Province dropped from 3,632 RMB/ton to 3,593 RMB/ton, a decrease of 1.06%, a month on month decrease of 2.37%, and a year-on-year decrease of 4.70%. The weak operation of international crude oil has led to significant competition for refinery resources, putting pressure on the asphalt market. Some high priced resources still have expectations of making up for losses. In the short term, the downstream procurement intensity of terminal demand is generally limited, and the domestic asphalt market will maintain a weak adjustment in the short term.
On the supply side, in terms of major production enterprises, Qilu Petrochemical switched to producing residual oil from May 19th to 21st, while Shandong Shengxing maintained its conversion status. However, Dongming Petrochemical resumed asphalt production on May 17th, and the production in Shandong region slightly decreased. The increase in daily production of Jinling Petrochemical has significantly increased production, and the resumption of asphalt production in Xinhai, Jiangsu at the end of the month has led to a slight increase in the operating rate in the Jiangsu region. Cangzhou XingaoRMB Plant has stopped producing asphalt, resulting in a slight decrease in supply in Hebei region. The comprehensive operating rate of the asphalt industry has decreased compared to the previous month. In April 2024, the import volume of asphalt was 365,000 tons, which was +23.6% compared to the previous month and +10.8% year-on-year. The import volume has increased, and there is a negative impact on the supply side.
On the cost side, in terms of crude oil: The overall decline in international oil prices is mainly due to the delayed expectation of the Federal Reserve's interest rate cut, ongoing market concerns about the economic and demand outlook, and an increase in US commercial crude oil inventories. As of May 24th, the settlement price of Brent crude oil futures main contract was reported at $81.84 per barrel.
On the demand side, some provinces have seen a decrease in actual demand due to environmental inspections. Currently, the lack of terminal demand is the main factor restricting the price decline.
As of the close of May 27th, the petroleum asphalt futures market closed down. The main asphalt contract 2409 opened at 3,671 RMB/ton, with a highest price of 3,695 RMB/ton and a lowest price of 3,667 RMB/ton. It closed at 3,671 RMB/ton at the end of the day, a decrease of 1% from the previous trading day's settlement, a decrease of 0.03%. The trading volume was 161,889 lots, and the position was 220,869 lots, with a daily increase of 807.
In the future market, international crude oil is expected to operate weakly, with weakened support for asphalt costs and increased market wait-and-see expectations. Some refineries and traders are more proactive in shipping, and market prices are stable but declining. On the demand side, rainy weather has a slight obstacle to hard demand, but actual demand remains relatively flat. SunSirs asphalt analysts predict that the domestic asphalt market will remain weak in the short term.
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