Since September, asphalt prices have been fluctuating downwards due to various factors. According to monitoring data from Shengyi Society, the ex factory price of heavy-duty asphalt # 70 in Shandong region was 3680 yuan/ton on September 1st, and as of September 29th, the ex factory price in Shandong region was 3593 yuan/ton.
In September, the supply of raw materials was abundant, and most local refineries maintained a high level of production enthusiasm, driving the overall asphalt production to increase compared to last week. Last week, the capacity utilization rate of 92 asphalt refineries in China was 42.0%, an increase of 5.7% compared to the previous week. The weekly asphalt production was 701000 tons, an increase of 15.5% compared to the previous week. Recently, competition for various brand resources remains fierce, and the pressure on asphalt supply remains high and difficult to reduce. It is expected that the planned production of asphalt in October will remain high, with a total domestic asphalt production of 2.682 million tons in October.

In terms of demand, some regions in China experience concentrated rainfall and typhoon weather, which hinders terminal demand. The national demand for asphalt shows a pattern of strong demand in the north and weak demand in the south. Due to the increase in supply and the suppression of demand by rainfall, the accumulation of inventory in Shandong region is more obvious. 104 domestic asphalt companies have a total social inventory of 154.1 tons. In the Northeast region, due to the narrowing of construction windows and price reductions by traders, the price advantage of social inventory resources has become apparent. Coupled with the support of rush work demand, the process of destocking has accelerated.
From the perspective of Shengyi Society, the fourth quarter has seen a significant increase in asphalt production recently, which may cause significant pressure on prices after the peak season ends and break the relatively strong pattern among asphalt consumers. Therefore, we hold a bearish view on asphalt prices in the fourth quarter.