Entering March, the asphalt futures market oscillated and adjusted, and the price fell from a high of 3370 yuan/ton to around 2840 yuan/ton, wiping out nearly half of the increase since November last year.
The rapid decline and slow rise may imply that the mid- to long-term upward trend of asphalt has not changed.
Cost support weakened
As the upstream of bitumen, the price of crude oil has a strong guiding role in the trend of bitumen.
Some recent market changes have made market investors more cautious.
The repeated epidemics in Europe and the stalemate in vaccination have caused many European countries to re-implement blockade measures.
The imaginative fiscal and monetary policies of Western countries have made emerging economies with relatively weak foundations deeply aware of imported inflation pressures, and forced to raise interest rates as an option.
There are various signs that the recovery of the global economy in the post-epidemic period will not be smooth and consistent.
However, the important supporting factors of oil prices have not fundamentally changed.
In geopolitics, missiles over Syria and drones on the Saudi border have always reminded us of the tensions in the Middle East; issues such as the Iranian nuclear, Sino-US relations, and US-Russian relations are not only hotspots of international politics, but also the most important issues.
Oil countries and consumer countries are linked.
Tight geopolitical relations will not only bring about short-term fluctuations, but also strengthen the mid-to-long-term trend.
On the industrial side, current information shows that OPEC+ is not interested in a rapid increase in production, while US shale oil production has recovered relatively quickly, and the overall supply recovery is relatively controllable.
Demand is still expected.
China’s economic growth target is set at 6%.
European and American drinking poisons will quench their thirst to release liquidity.
Although most of them have irrigated the stock market, once the epidemic eases, industrial demand will show up.
The short-term correction of oil prices has weakened the cost support for asphalt, but it is expected that there is still limited room for short-term adjustments in oil prices.
Asphalt demand is expected to pick up
The domestic asphalt market has relatively stable supply.
According to statistics from Baichuan Information, as of March 20, the total operating rate of 72 major asphalt refineries was 39%, a drop of two percentage points from the previous month.
Although the operating rate is relatively stable, considering the new capacity, output may increase.
Oil prices have adjusted back and refined oil profits have risen, and refineries have a certain incentive to start operations.
Although two streams of cold air flowed southward last week, it was already at the end of the strong crossbow.
Starting this week, the north may take the lead in warming up, and the temperature increase may be 4-10°C, which is beneficial to the road construction in the north.
The construction progress in the south has been slightly slow.
Although the temperature has rebounded, the precipitation has not gone far.
The downstream demand may gradually increase in different regions as the overall weather conditions improve.
In addition, 2021 is the first year for the country to accelerate the construction of a transportation power and implement the "14th Five-Year Plan", and there is a certain guarantee for the continued high-level operation of road construction investment.
Asphalt inventory is relatively high
Due to the large number of social inventory carryovers last year, refineries continued to accumulate inventory.
According to statistics from Baichuan Information, as of March 20, the total domestic refinery asphalt inventory rate was 38%, the same month-on-month; the total social inventory rate was 55%, up 4% from the previous month.
Asphalt inventory changes are due to some seasonal reasons, including winter storage.
In the context of seasonal changes in demand, normal inventory levels will not have a major impact on the trend, and more of a slow-release effect of peak-cutting and flat-valley.
To sum up, the current upstream cost support of asphalt is loose, inventory is at a seasonally high level, and prices are under certain pressure.
However, the fundamental situation continues to improve.
The overall trend has not changed.
The short-term possible range oscillates, digesting the previous increase, and there is still room for growth in the medium term .
Transfer from: Futures Daily
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