In April, the Shandong asphalt market completed a trend of “first suppression and then rise”, and the supply and demand pattern turned at the end of the month. Combined with the current fundamentals and core variables, the future Shandong asphalt market will mainly experience strong fluctuations, with the core dominated by supply, cost, and demand, while also paying attention to uncertain factors

The tight supply side pattern will continue, which is the core of price support and difficult to alleviate in the short term. As of the end of April, the operating rate of Shandong refineries was only 21.5%, and the overall operating rate in China dropped to a low of 16.1%, indicating a tight supply of goods. The production schedule of Shandong’s local refining plan in May decreased year-on-year and month on month, indicating a clear contraction in supply. In addition, the refinery’s asphalt processing continues to suffer losses, and companies tend to switch to high profit products, making it difficult to increase short-term operating rates. The tight supply pattern dominates the future market.
The existence of cost support but increased volatility is the biggest uncertainty variable. The current high volatility of international oil prices provides cost support for asphalt. However, there is a clear game of long and short oil prices, with geopolitical tensions and low inventory supporting oil prices, while the Federal Reserve’s interest rate cuts and increased US crude oil exports suppress the upward trend, and there is a high probability of short-term fluctuations and differentiation. In the future, attention should be paid to the situation between the United States and Iran. If easing occurs, the pullback of crude oil will weaken support, while upgrading will drive asphalt upward.
The demand side is gradually recovering, but the strength is limited and only serves as auxiliary support. The rise in temperature has driven the start of road construction in Shandong, with slow release of terminal demand. However, downstream construction rates are still low, and high prices have suppressed purchasing intentions. Rainfall in East and South China has dragged down construction, and the demand in the waterproofing industry has remained stable but not increased. The overall recovery is slow, making it difficult to drive prices up significantly.
From the perspective of Shengyi Society, Shandong asphalt is expected to experience strong fluctuations in the future, with the upward trend being limited by demand and crude oil, and the downward trend being supported by supply. Focus on the US Iran situation, crude oil trends, and refinery operations in the short term, and track downstream demand in the medium to long term. The price of Jingbo # 70 in Shandong region is expected to fluctuate within the current range of 4300-4400 yuan/ton, with a focus on the volatility of crude oil. If the supply is tight and demand accelerates, there will be a slight upward trend. If crude oil rebounds or demand falls short of expectations, there will be a periodic pullback. Geography and crude oil are key factors in the market.