The low supply of asphalt provides solid support, and the average spot price in December has increased
Despite the decline in asphalt demand in December, coupled with the narrow fluctuations in crude oil prices, the cost side and demand face limited support for asphalt spot prices. However, due to the overall low operating load rate of asphalt plants this month, there have been no significant signs of oversupply in the asphalt spot market in December, with solid support from the supply side, leading to an increase in the monthly average asphalt spot price.
The monthly average price of asphalt in December increased month-on-month.
In December, the overall trend of asphalt spot prices showed an initial rise followed by a decline. As of December 27, 2024, the average spot price of asphalt in December was 3752.22 yuan/ton, an increase of 36.53 yuan/ton, or 0.98%. The highest price in December was 3811.57 yuan/ton, occurring on December 4, while the lowest price was 3722.29 yuan/ton, recorded on December 26. In terms of fluctuation range, the fluctuation range of domestic asphalt prices in November was 89.28 yuan/ton, which significantly expanded compared to November. Overall, due to the continued low supply of asphalt, there was a temporary increase in asphalt spot prices at the beginning of December. Although the rigid demand for asphalt in northern regions stagnated and weakened in December, leading to a continuous decline in asphalt spot prices and an expansion in the fluctuation range, the prices showed a certain resilience supported by the supply side, with the monthly average asphalt price primarily increasing month-on-month.
Crude oil prices remain in a narrow range of fluctuation, and the cost support for asphalt is limited.
From the cost perspective, the average price of US crude oil this month was $69.46 per barrel, a decrease of 0.11% compared to last month and a drop of 3.68% compared to the same period last year; the average price of Brent crude oil was $72.92 per barrel, a decline of 0.66% compared to last month and a fall of 5.69% compared to the same period last year.
In December, the oil price overall showed a narrow range of fluctuation. The mainstream fluctuation range of US crude oil was between 69 and 71 dollars per barrel. The oil market was in a narrow range of fluctuation, and there was no core contradiction in the market. On the one hand, the situation in Europe and the Middle East continued to cool down, and the market expected that a series of ceasefire agreements would be reached. The impact of geopolitics on oil prices weakened, but the extension of production cuts by Saudi Arabia and many other countries for three months provided support to the oil market. On the other hand, a series of policies in China provided support, and the expectation of a positive economic outlook remained unchanged, providing confidence for the stable increase in oil demand. However, after the Federal Reserve cut interest rates by 25 basis points, the series of economic data released did not change the expectation of a slowdown in future rate cuts. The US dollar remained at a high level, putting pressure on oil prices. Therefore, on the macro level, the strong US dollar and the positive economic outlook of China offset each other, and on the fundamental level, the geopolitical situation and the extension of production cuts by Saudi Arabia offset each other. Under the game of bulls and bears, the oil price fluctuated in a narrow range.
As the crude oil prices remained within a narrow range this month, the average monthly price of crude oil in December saw a slight decline compared with the previous month. The cost of crude oil has not provided a clear guidance for the spot price of asphalt, and the support from the cost side to the spot price is relatively limited.
The operating load rate of asphalt plants continues to decline, while the supply side remains relatively stable.
From the perspective of the asphalt fundamentals, although the rigid demand for asphalt in northern regions gradually decreases as winter deepens, the negative impact on the spot price of asphalt from the demand side is evident. However, due to the relatively weak improvement in asphalt production profits in December, the production profits of major refineries are stronger than those of local refineries, and the production enthusiasm of local refineries is generally moderate. The average monthly operating load rate of asphalt plants in December was 32.46%, a decrease of 3.07 percentage points compared to the previous month. The overall asphalt output significantly decreased compared to November, and with asphalt refineries and social inventories still maintaining low levels, there are signs of a tight supply-demand rhythm in some regions this month. This has provided solid support for the spot price of asphalt, and the stability of the supply side has somewhat delayed the decline in the spot price of asphalt, making it a major favorable factor for the spot price of asphalt in December.
In the short term, regarding supply, the planned asphalt volume for January is 1.996 million tons, a decrease of 167,000 tons compared to the previous month. Additionally, the current asphalt inventory is at a low level; even if there is an accumulation in January, the extent will be limited. Therefore, the supply side provides certain support to the market. However, from the cost perspective, the crude oil price in January, under the interplay of various factors, currently lacks direction and essentially maintains a fluctuating trend. The cost side does not provide sufficient positive support to the asphalt spot market. Furthermore, influenced by the Spring Festival holiday, the rigid demand for asphalt in January may drop to a low level, and the negative impact on the demand side may be quite evident. The changes in the supply-demand rhythm brought about by the seasonal weakening of demand may still be a major factor influencing the decline in asphalt prices in the future, leading to a downward trend in prices in January.