Asphalt: Strong prices in the traditional off-season

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　Recently, affected by disruptions in raw material supply caused by heightened tensions in the international and regional landscape, the asphalt market has seen a surge in prices during the traditionally slow season for demand. However, constrained by fundamental factors such as weak demand and high inventories, asphalt prices quickly entered a range-bound phase after a short-term surge. Industry experts believe that the supportive effect of external factors is temporary, and the market as a whole will still be driven by supply and demand fundamentals. 　　Shockwaves from thousands of miles away: By the end of December 2025, which is typically a slow period for demand for asphalt products, the average ex-plant price of No. 70 asphalt produced by refineries in Shandong was 2,900 yuan per ton (the same unit is used throughout). On January 5, 2026, asphalt prices rose rapidly, peaking at 3,150 yuan ； The futures market also rose in tandem, with the asphalt 2602 contract gaining 4.4% over the course of a week. Overseas markets were also affected; **Tipco, the largest asphalt producer, raised its product prices by 12% at one point. 　　This price fluctuation that began at the start of the new year stems from changes in the supply of raw materials from distant places. It is understood that Venezuela’s crude oil exports have seen a significant decline recently. As of January 5, the total amount of crude oil in that country that remained at sea and unable to leave port exceeded 17 million barrels. 　　As one of the important sources of raw materials for global asphalt production, Venezuela possesses 300 billion barrels of crude oil reserves, accounting for 17% of the world’s total reserves. The “Mare Nostrum” crude oil produced there is a typical high-sulfur, ultra-heavy crude oil, making it an appropriate raw material for producing asphalt and ship fuel. Although its crude oil production accounts for a small share of the global market, sharp changes in export volumes in the short term can also affect the availability of raw materials and cost expectations in regional markets. Data shows that its crude oil exports in December 2025 declined significantly on a month-on-month basis; this expectation of short-term supply contraction directly affected the prices of end products. 　　Wu Yan, an analyst at Longzhong Information, said that asphalt prices are closely linked to crude oil costs. Recently, there has been an increase in uncertainty regarding the sources of raw materials, raising the risk of potential supply shortages. In the short term, this is likely to provide support for both oil prices and asphalt prices. 　　Dual constraints of demand and inventory: Market experts point out that since 2025, the pricing logic in the oil market has placed greater emphasis on the fundamentals of supply and demand. These short-term fluctuations caused by external factors are unlikely to change this long-term trend. Although asphalt prices saw a temporary uptick, their upside potential remains constrained by both weakening demand and inventory pressures. 　　Gao Xinwei, a professor at the School of Economics and Management of China University of Petroleum (East China) and head of the Shandong Energy Economics and Management Research Center, said that in recent years, the weak demand for asphalt materials in global and domestic infrastructure construction has to a large extent mitigated the impact resulting from supply-side factors. Therefore, the current fluctuations in asphalt prices reflect more of a short-term release of pressure on costs, rather than a fundamental change in the industry landscape. 　　Data from Sina Finance’s Energy R&D Center shows that, from the supply side, Chinese refineries produced 553,000 tons in the final week before New Year’s Day, a 14% increase on a weekly basis. From the demand side, the operating rate of road modified asphalt that week was 20%, showing a decline for 4 consecutive weeks ； Supplies available at low prices in the market continue to compete for sales; Shandong’s local refineries shipped 148,600 tons of crude oil that week, a 19% increase on a weekly basis. From an inventory perspective, social and on-site inventories reached 666,000 tons that week, a 4% increase from the previous week. These data reflect a weak fundamental structure during the off-season, putting pressure on rising asphalt prices. 　　Analysts at Everbright Futures believe that in the short term, the asphalt market will see support at its bottom due to factors related to raw materials and supply; they expect asphalt prices to continue to fluctuate widely, with market attention likely shifting to future raw material supplies. 　　This year, supply and demand are trending toward a new balance. Li Haining, an analyst at Zhuochuang Information, pointed out that the two main uses of asphalt are road construction and building waterproofing; its demand is closely linked to investment activities in related sectors. By 2025, domestic asphalt consumption is expected to reach 30.7803 million tons, an increase of 1.8763 million tons compared to 2024, representing a year-on-year growth rate of 6.49%. Over the next 5 years, investment in the real estate market will gradually slow down, and infrastructure investment will place greater emphasis on the quality and efficiency of such investments. These changes in investment patterns will also lead to a decline in the overall demand for asphalt. 　　Li Lili, an analyst at Longzhong Information, believes that China’s asphalt production is expected to reach 28.1 million tons this year; combined with approximately 3.33 million tons of imports, the total supply will amount to 31.43 million tons. The growth rates in various downstream sectors vary. Demand for road construction is increasing only slightly; the increase in consumption is expected to be 23.52 million tons, a 1% decrease compared to the previous year ； The consumption of building waterproofing materials is expected to be 3.67 million tons, a 16% decrease compared to the previous year. However, due to the price difference between asphalt and coking materials, some of the asphalt is diverted to the ship fuel and coking sector where there are greater profit margins; the consumption of coking ship fuel is expected to reach 3.36 million tons, an increase of 8.7% on a year-on-year basis. Overall, the annual supply-demand gap is expected to be around 880,000 tons, with the fundamental trend being an oversupply situation. 　　Li Lili also stated that currently, the biggest issues in the asphalt supply-demand balance are the phasing out of outdated production capacity and a rapid decline in consumption, which has slowed down the pace of inventory reduction ； Domestic refineries are deepening their petrochemical transformation, which has led to a decline in asphalt yield; this helps alleviate supply pressures. However, the drive for production profits will boost refineries’ enthusiasm, and the market supply-demand relationship will gradually reach a new equilibrium through dynamic adjustments.