Recently, amid supply disruptions triggered by regional tensions, the asphalt market experienced a price surge during its traditional off-season. However, constrained by weak demand and high inventory levels, prices quickly entered a plateau phase after the short-term spike. Industry insiders believe the supportive effect of external factors is temporary, and the market will ultimately continue to operate around supply and demand fundamentals.

Shockwaves from Afar

At the end of December 2025, during the traditional off-season for asphalt demand, the average ex-factory price of 70-grade asphalt from Shandong's independent refiners stood at CNY2,900  (per ton, same below). On January 5, 2026, asphalt prices surged rapidly, peaking at CNY3,150. Futures markets followed suit, with the asphalt 2602 contract climbing 4.4% within a week. Overseas markets were also affected, prompting Thailand's largest asphalt producer, Tipco, to temporarily raise product prices by 12%.

This price fluctuation, which began at the start of the new year, originated from distant shifts in raw material supply. It is understood that Venezuela's crude oil exports have recently contracted significantly. As of January 5, the total volume of the country's crude oil stranded at sea and unable to depart port exceeded 17 million barrels.

As a key global source of raw materials for asphalt production, Venezuela holds 30 billion barrels of crude oil reserves—representing 17% of the world's total reserves. Its “Marey crude” is a typical high-sulfur, extra-heavy crude oil, making it an ideal feedstock for producing asphalt and marine fuel. Although Venezuela's crude output accounts for a small share of the global market, sudden shifts in its export volumes can significantly impact regional markets' access to raw materials and cost expectations. Data indicates a significant month-on-month decline in crude exports for December 2025. This anticipated short-term supply contraction has directly impacted end-product pricing.

Asphalt prices are highly correlated with crude costs. Recent heightened uncertainty in feedstock sources and increased potential supply contraction risks are likely to provide near-term support for both crude and asphalt prices.

Dual Constraints of Demand and Inventory

Market participants note that since 2025, oil market pricing logic has increasingly prioritized supply-demand fundamentals. This short-term volatility triggered by external factors is unlikely to alter this long-term trend. Although asphalt prices have seen temporary boosts, their upside remains constrained by dual pressures of weakening demand and inventory burdens.

In recent years, subdued demand for asphalt materials from global and domestic infrastructure projects has largely diluted the impact from the raw material side. Therefore, the current asphalt price fluctuations primarily reflect a short-term release of cost pressures rather than a fundamental shift in the industry ecosystem.

Data indicates that from the supply side, China's refinery output reached 553,000 tons in the final week before New Year's Day, a 14% increase from the previous week. On the demand side, the operating rate for road-grade modified asphalt stood at 20% that week, marking a fourth consecutive week of decline. Low-priced goods continued to compete for sales, with Shandong's independent refiners shipping 148,600 tons that week, a 19% increase week-on-week. Inventory data showed that social and on-site inventories reached 666,000 tons that week, a 4% increase from the previous week. These figures reflect the weak fundamental structure during the off-season, exerting downward pressure on asphalt prices.

In the short term, the asphalt market is showing signs of bottoming out, supported by raw materials and supply. Asphalt prices are expected to continue fluctuating within a wide range, with market focus potentially shifting to future raw material supply conditions.

Supply-Demand Balance to Stabilize This Year

Asphalt's primary applications—road construction and building waterproofing—are closely tied to investment activity in these sectors. Domestic asphalt consumption is projected to reach 30.7803 million tons in 2025, an increase of 1.8763 million tons (6.49%) from 2024. Over the next five years, real estate investment will gradually slow, while infrastructure investment will increasingly prioritize quality and efficiency. These shifts in investment patterns will collectively reduce overall asphalt demand.

This year, China's asphalt production is projected at 28.1 million tons. Combined with approximately 3.33 million tons of imports, total supply will reach 31.43 million tons, with varying growth rates across downstream sectors. Road construction demand shows limited growth, with consumption projected at 23.52 million tons, down 1% year-on-year. Building waterproofing consumption is expected to reach 3.67 million tons, down 16% year-on-year. However, due to the price differential between asphalt and coking materials, some asphalt is diverted to the coking sector for marine fuel, where profit margins are higher. Coking marine fuel consumption is projected at 3.36 million tons, up 8.7% year-on-year. Overall, the annual supply-demand gap is projected to be around 880,000 tons, indicating a fundamental trend of oversupply.

The primary challenge in asphalt supply and demand currently stems from the slow pace of inventory reduction, driven by the phasing out of outdated production capacity and accelerating consumption decline. Domestic refineries deepening their petrochemical transformation have reduced asphalt yield, which helps alleviate supply pressure. However, profit incentives will boost refinery production enthusiasm, leading the market supply-demand relationship toward a new equilibrium through dynamic adjustments.

As an integrated internet platform providing benchmark prices, on January 16th, the benchmark price of asphalt according to SunSirs.com was 3140.00 RMB/ton, an increase of 5.61% compared to the beginning of the month (2973.33 RMB/ton).

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