Zhuochuang Information Analyst Geng Wen
[Introduction] In early June, due to geopolitical situation, crude oil prices remained strongly volatile overall this week, and the cost side had certain support for asphalt prices. In addition, traders in some regions have low shipment pressure at the beginning of the month, and their price support mentality is relatively strong. In addition, asphalt futures have remained at a high level overall fluctuation, which has boosted market sentiment. As of the week ending June 5, the average price of asphalt spot continued to rise. In the short term, although there is a possibility of continuous improvement in demand in the north, the continued increase in rainfall in the south may restrict the construction of road projects. The demand and supply side performance may still be relatively short, and the spot price of asphalt continues to operate weakly and steadily.
The spot price of asphalt increased during the week
The overall price of asphalt showed a continuous upward trend in early June. As of the week ending June 5, the average spot price of asphalt fell to 3733.29 yuan/ton, up 22.07 yuan/ton month-on-month, an increase of 0.59%. The highest price during the week was 3741.5 yuan/ton, which occurred on June 5. From the perspective of fluctuation range, the domestic market asphalt price fluctuation range after the Dragon Boat Festival was 7.14 yuan/ton, and the spot price of asphalt rose narrowly after the holiday. Overall, although rainfall in some areas in the south has been frequent in the past week, the impact on road project construction has been obvious, and the overall rigid demand for asphalt is weak, due to the positive market sentiment at the beginning of the month, and the price of crude oil remains strong and fluctuating, it supports the upward trend of asphalt spot prices.
Crude oil prices remained relatively high in recent times and fluctuated. There was certain support on the asphalt cost end
From the cost end, before Russia and Ukraine directly met, Ukraine launched a large-scale attack on a European country, and the situation was serious. The United States was not even aware of it. The market was worried that the hope of a peaceful ceasefire has decreased, the geopolitical premium returned to the market, and the crude oil price was running strong. However, Saudi-led OPEC+ continued to increase production, and the increase in output was relatively large. After a significant increase in production in May and June, the daily output increased by 411,000 barrels in July, exceeding market expectations, which limits the increase in crude oil prices. In addition, the US small non-agricultural data is weak, and the market is worried about economic problems, which also puts pressure on the rebound above oil prices. Under the influence of market long and short factors, the overall crude oil price in early June remained at a relatively high position recently. As of the week ending June 5, the average price of US crude oil was US$62.1 per barrel, up 0.74 per barrel, or 1.2% from last week; the average price of Brent crude oil was US$64.63 per barrel, up 0.04 per barrel, or 0.07% from last week. The overall crude oil price has maintained a relatively strong operation, which has certain positive impacts on the asphalt spot market sentiment, and the support for the asphalt cost end is relatively stable.
The load rate of asphalt equipment has increased significantly, but the market's price-resistance mentality at the beginning of the month was relatively strong
From the asphalt fundamentals, the load rate of asphalt equipment increased significantly in early June. Although the load rate of asphalt equipment decreased slightly during the Dragon Boat Festival holiday, it showed a significant increase after the holiday. As of June 4, the average weekly start-up load rate of asphalt equipment was 40.86%, an increase of 5.13 percentage points month-on-month. This week, the load rate of asphalt equipment for main refineries and local refineries increased, with the increase in the main refineries and the market supply was significantly abundant. However, since traders were not in a hurry to ship contracts for that month at the beginning of the month, and the northern market had certain expectations of improvement in asphalt demand in June, this offset the negative impact of the abundant supply of asphalt spot resources to a certain extent. Therefore, the asphalt spot market has a strong attitude towards price support.
In the short term, due to the poor performance of US economic data, oil-producing countries have different opinions on subsequent production increases. It is expected that crude oil prices will continue to fluctuate and fluctuate, with the operating range similar to this week, and the cost side will provide positive benefits. However, from the supply and demand perspective, despite the clear weather in the north and the continuous construction of road projects, demand may continue to improve. However, there will be more continuous rainfall in the south, with moderate to heavy rain in the middle and lower reaches of the Yangtze River, South China and the eastern part of the southwest region, and heavy rain in some areas, and demand along the river will be more restricted by weather factors. In addition, the starting load rate of asphalt equipment is near the highest level this year, and the possibility of continued sales in society is extremely low. Overall, the supply and demand pattern of the asphalt spot market is unlikely to improve significantly, and the supply and demand side has limited the upward trend of asphalt spot prices to a certain extent. It is expected that the asphalt spot price will continue to operate weakly and stably in mid-to-early June.
