Asphalt: After a wave of decline to maintain the current consolidation

Asphalt spot market after a wave of decline after the current to maintain consolidation. The current downstream road project has not been focused on the start, the demand is still limited, mostly in the main inventory consumption, traders buying enthusiasm is not high, refinery inventory growth, mostly price sales. The market need to pay attention to whether the demand in late May after the start, from the disk point of view, backed by 2400 yuan / ton support, 1709 contracts have long opportunities to do more.

Inventory slightly higher

Since the beginning of the year, the asphalt refinery operating rate as a whole is low, the first quarter operating rate of only about 50%, at historically low; but since April, the refinery started to pick up, especially in mid-April operating rate rose to 60% ; But in early May fell again to about 50%. Data show that as of May 3 the week, the major domestic asphalt refinery operating rate of 56%. Among them, the South China, Southwest and Northwest region operating rates are about 70%, which is better with the needs of the western region is directly related to the Northeast and the operating rate of about 60%; Yangtze River Delta and Shandong operating rates are about 50%. Overall, the recent domestic asphalt refinery started short-term recovery, but the overall is still not high, is expected in late May after the demand improved, the refinery start level is expected to further rise.

On the other hand, the refinery started to pick up but the demand did not follow up, traders demand for procurement decline, resulting in refinery inventories began to increase from the beginning of April, as of May 3 week, refinery stocks increased to 34% Regional stocks increased to about 40%, northeast, Shandong and the Yangtze River Delta region increased to about 35% of the stock, Northwest stocks increased to about 25%.

Asphalt refinery profits rise

This year, as oil prices fell and asphalt prices rose, asphalt and crude oil prices are also rising, which means that the refinery profits compared with 2016 is also improved. According to the statistics of the river, the first quarter asphalt refinery profitability, theoretical profits continue to improve, to the beginning of May theoretical profit reached 392 yuan / ton, the overall higher than last year’s profit level. But we believe that the late refinery profits difficult to have greater room for growth, because the third quarter crude oil trend is expected to be strong, and the asphalt is difficult to have a larger upside, so the refinery profits are expected to increase is limited.

Demand in the western region is bright

In the near future, infrastructure projects in the western region have been started to reduce the demand for asphalt terminals. The demand for asphalt in the western region has continued to rise. The refinery inventory in the northwest and southwest regions has been lower, traders and owners have increased demand for high quality asphalt. But the demand for other regions is still relatively limited, the lower road construction projects started less, traders increased inventories, refinery shipping pressure. In addition, South China and Southwest and other places affected by rainfall, the project construction is difficult to effectively carry out, to suppress the market will. In the case of poor overall market demand situation, the refinery may still increase the recent efforts to promote the shipments, but the overall price range is expected to not be too much. In the future, we expect the overall market demand in May to be improved in April, with particular attention to whether there will be substantial changes in asphalt demand since mid to late May.

March imports of asphalt has increased

Since late March, imports of asphalt prices have changed the previous situation, South Korea and Singapore imported asphalt are down. Singapore asphalt May cargo two major brand prices are down, CIF fell 17.5 yuan / ton to 345-360 yuan / ton, the dutiable value of 2800-2950 yuan / ton. South Korea asphalt cargo prices in May there are different rates of decline, the East China CIF fell to 295-320 US dollars / ton, dutiable value in the 2550-2700 yuan / ton, low prices and parts of East China asphalt prices basically flat. In March, domestic imports of asphalt increased over the previous two months, imports in March more than 400,000 tons, much higher than the import level in January and February.