SunSirs: China Asphalt Fundamentals Improves, but Low-priced Resources are Showing Reluctance to Sell

On the supply side, the asphalt operating rate fell 1.7 percentage points month on month to 24.8%, the lowest in the same period of previous years. Under the loss of profits, refinery asphalt will continue to operate at a low rate. Last week, the operating rates of various industries downstream of asphalt showed mixed results, with road asphalt operating rates falling by 1 percentage point, slightly lower than the same period last year, and at the lowest level of the same period this year.

Road infrastructure is still constrained by funding and has only made slight improvements. The inventory of asphalt refineries has slightly decreased compared to last week and is still at a historical low. The issuance of super long term special treasury bond mentioned in the government work report will help relieve the financial pressure of local governments, and focus on whether the subsequent asphalt infrastructure can be promoted.

At present, the supply and demand of asphalt are weak. Although production has decreased, the overall shipment volume of asphalt has risen to nearly 260,000 tons due to the implementation of end of month contracts in Shandong region. Venezuela's Maduro has been re elected, and the United States may increase sanctions. The discount on Mari crude oil may increase, and it is expected that asphalt will continue to fluctuate with crude oil. Due to the improvement of asphalt fundamentals, some low-priced resources are being sold out, and it is recommended to buy asphalt on dips.

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