candywaysbonanzamegaways| Chang 'an Futures Fan Lei: Weak supply and demand cost support may still boost asphalt

Since MayCandywaysbonanzamegawaysPetroleum asphalt prices basically maintained a volatile trend, although the low opening in early May led to a significant decline in prices, but in mid-early May basically stabilized the downward trend consolidation operation, and in late May began to have an obvious rebound trend.

I. fundamentals

On the supply side, the national refinery operating level has continued to maintain a downward trend since May, which is still due to a large number of refinery overhauls. According to May 15 data, the national operating rate has dropped to 25%.Candywaysbonanzamegaways.7%, down nearly 30% from the high in mid-March, significantly lower than after International Labour Day. At the same time, in terms of output, as of May 17, the output of domestic independent refineries is now lower than at the beginning of May, reaching 23.Candywaysbonanzamegaways.40 million tons, but up from the low of 215000 tons in mid-April, and the domestic operating rate is as high as 29.4% in the same period under horizontal comparison, which means that in the later period, with the formal arrival of the peak consumption season, the elasticity of asphalt on the supply side is still strong, but it is slightly weak at present.

On the demand side, at present, the asphalt demand shows an obvious differentiation between the north and the south. With the rise of temperature in the north, the demand for traditional roads will gradually pick up with the help of high temperature weather, and the market rigid demand will increase slowly. at present, the south is still dragged down by the overcast and rainy weather, resulting in lukewarm overall consumption performance, difficult to have obvious changes, but what can be expected is With the further warming of temperatures and the seasonal return of consumption in the south, although the rigid demand for domestic road laying is significantly lower than in previous years, the boost to asphalt during the year will also be expected. However, combined with the implementation of the special debt during the year, the current capital flow in the lower reaches is relatively poor, and high inventory suppresses the willingness to prepare goods downstream, so objectively speaking, the consumption of asphalt is still weak.

In terms of inventory, the asphalt factory warehouse has maintained a continuous accumulation trend since April. At present, the factory warehouse of 54 sample enterprises across the country has accumulated to 1.193 million tons, which is basically equal to the high level of the same period in 2022. This has obviously suppressed the willingness to prepare goods downstream, and also caused some pressure on prices. In terms of social treasury, although the recent asphalt social inventory remains at a high level, it has shown a certain downward trend, and there has been no further accumulation of social treasury data since May. On the one hand, this result will also form a certain degree of suppression on demand, but in the medium to long term, with the slow removal of the social treasury, asphalt prices will also get a certain support.

Second, profit base difference

In terms of profit, the price difference between Shanghai petroleum asphalt and SC crude oil (1CandywaysbonanzamegawaysAlthough the price difference between the two has fallen to a low of 113 yuan / tonne, it is still at a relatively high level compared with previous years, mainly because demand is currently in a relatively weak stage. However, as mentioned earlier, with the release of seasonal demand, asphalt prices are expected to gain some support again, which will also provide some help for the strengthening of cracking spreads, so there may still be more opportunities for cracking in the later stage. however, it is worth noting that the process may be difficult to achieve in the short term, and low entry can be considered for medium-and long-term layout in the near future.

In terms of basis, Shandong mainstream price corresponding basis continued the previous strong situation in mid-May. Shandong asphalt base has bottomed out since late April and reached a high in early May. However, there has been a certain downward trend again recently, mainly due to the strong domestic spot. It is worth noting that, from a seasonal point of view, the asphalt base difference will show a further strong situation after entering the summer, which may lead to a certain operating space above the following. For insurance, the recent decline in the basis may be a considerable opportunity to enter.

III. Cost

In terms of the price of crude oil at the cost end, the recent crude oil price is basically volatile, and the confrontation between supply and demand still exists in the fundamentals. The situation of tight supply and weak demand will continue to lead to the marginal weakening of the backing force of oil prices, but considering that OPEC+ will hold an online meeting at the end of the month, and there is a high probability to prolong the production reduction. This may cause the tightening of supply to become one of the main factors to boost oil prices in the future. In terms of financial attributes, the slowdown in US inflation has greatly boosted market expectations of interest rate cuts this year, but the answer may not be seen until September in the third quarter, after high interest rates will continue to depress oil prices; in terms of political attributes, the conflict in the Middle East remains highly uncertain, which could lead to higher oil price volatility given the political turmoil in Iran and Saudi Arabia. Therefore, on the whole, the crude oil price still has a good upward possibility in the third quarter, but considering the uncertainty of the geographical attribute, the fluctuation range of the oil price will further expand, which may have a significant impact on the asphalt price. and lead to synchronous amplification of asphalt price fluctuations.

IV. Views and prospects

Recently, the asphalt price still maintains the objective situation of weak supply and demand, and the price is also mainly following the fluctuation of crude oil, but it is worth noting that with the release of follow-up demand and the relative temperature of the oil price, the asphalt price may have a further strong shock, and there may be a certain Budo cracking price difference and the opportunity to buy hedging in the later stage.

For reference only.

Brief introduction of the author:

Fan Lei, qualification certificate number: F03101876, graduated from Trinity University in Canada with a master's degree in business administration. He has a solid theoretical foundation and a certain international perspective. Since entering the futures industry, it has been committed to the research and analysis of crude oil series energy varieties and non-ferrous metal series, and is good at starting with fundamental analysis and combining theory to build a variety analysis framework to study and judge the market. and adhere to professional knowledge and sincere attitude to create value for customers.