According to the Commodity Market Analysis System of the Business Society, the domestic asphalt market surged in July. From July 1st to 27th, the average price of asphalt producers in Shandong Province increased from 3767 yuan/ton to 3854 yuan/ton, an increase of 2.30%. The maximum amplitude for the month was 2.71%, and the price decreased by 9.57% year-on-year.

At the beginning of the month, international crude oil was operating strongly, with some support for asphalt costs. However, the overall supply remained at a high level. Hebei Kaiyi Petrochemical planned to produce finished products and Jincheng Petrochemical planned to resume production, resulting in regional demand differentiation. The demand in the northern region was supported, while there was more rain and gas in the eastern China region along the Yangtze River. The actual demand was average.

In the first half of the month, boosted by favorable factors such as rising crude oil prices, relatively low supply, and tight available resources, the domestic asphalt market prices slightly increased.

In the latter half of the month, Typhoon “Taili” hit, causing some precipitation to increase and affecting downstream demand. In the short term, the market may show a strong demand in the south and weak demand in the north, and the asphalt market situation will be sorted and operated.

On the cost side, the crude oil market surged in July, and WTI crude oil reached its highest point in the past three months. The settlement price of the Brent crude oil futures main contract was $82.74 per barrel, an increase of $1.67 or 2.0%. The oil market has been boosted by the expected tightening of supply and continued fermentation, as well as the rebound in demand. As of July 26th, the Federal Reserve announced a 25bp interest rate hike, coupled with a lower than expected decline in US crude oil inventories, resulting in profit taking in crude oil futures and pressure on prices. The high cost of international crude oil market is favorable for the domestic asphalt market.

On the supply side, the comprehensive operating rate of the asphalt industry has increased month on month, and there is a negative impact on the supply side.

On the demand side, the asphalt market demand is relatively flat, with varying demand in different regions. In some northern regions, future rainfall weather may increase, affecting the construction process of downstream terminals. However, the overall demand in the south has improved, and the phased demand may show a strong situation in the south and weak situation in the north. The demand side of the asphalt market has a relatively stable impact.

In the future market forecast, international crude oil has a wide range of fluctuations, with certain cost support, relatively abundant market supply, and strong demand from the south to the north. Business Society asphalt analysts expect that the short-term domestic asphalt market situation will be mainly sorted out.