Source: Futures Daily
Driven by profit recovery and demand improvement,asphaltSupply has rebounded month-on-month, and it is expected that supply and demand will grow simultaneously in the future. In addition, asphalt futures tend to follow costs down, and the absolute level of the basis will remain at a high level.
A Crude oil market trending down
Asphalt is the residue after the distillation of crude oil and is a refinery product. In theory, the trend of crude oil price has a cost guide for the trend of bitumen price. Judging from historical data, the long-term correlation between asphalt futures and crude oil futures reached 0.9. The overall performance is that the price trend of asphalt mainly follows crude oil, and some time, due to the difference between supply and demand, the two are differentiated. Since the middle of this year, SC crude oil has performed strongly, but European and American crude oil has continued to fall, driving the focus of bitumen prices to move down.
Under the sanctions of Europe and the United States, Russia’s supply is further constrained, and the possibility of major adjustments in the OPEC+ production policy during the year is low. In addition, there is still no timetable for the return of Iranian supplies. Currently, the biggest pressure on the demand side stems from a weakening economy. The negative impact of a weaker economy on consumption will gradually materialize. The European energy crisis has triggered structural problems in the demand for petroleum products to a certain extent. From the perspective of supply and demand balance, the weakening of demand is relatively certain. The changes in the crude oil supply and demand balance sheet mainly depend on the supply side. Whether the Iranian supply can return and the degree of Russian supply constraints have a greater impact on the global crude oil market.
On the whole, the upward driving force of oil prices is limited. Once the geopolitical factors ease, the downward driving force of oil prices will begin to exert force, and the future cost side will suppress the trend of asphalt.
B feed is further increased
At the beginning of the year, affected by low profits and low demand, the operating rate and output of domestic asphalt refineries continued to be lower than the same period of previous years. Since May, with the improvement of the epidemic and the restoration of asphalt profits and demand, refinery production enthusiasm has increased. As of early September, the refinery operating rate has reached the lower limit of the historical level for the same period. With the recovery of the operating rate of refineries, the output of asphalt increased significantly after July, and the output from July to August was close to the level of the same period last year. In addition, judging from the refinery’s production scheduling data in September, the output will further increase and is expected to reach 2.87 million tons, a month-on-month increase of 6.3% and a year-on-year increase of 13.3%. Among them, the output of ground refining and discharge was 1.961 million tons, a month-on-month increase of 18.13% and a year-on-year increase of 56.35%.
Since the second half of the year, the absolute profit of asphalt refineries has continued to improve. In mid-August, the comprehensive production profit of Shandong local refinery once exceeded 600 yuan/ton. From the perspective of relative profits, the price difference between diesel and asphalt has widened month-on-month, and the absolute price difference is still at a high level in the same period in history, indicating that the profit of refined oil is relatively better than that of asphalt. On the whole, although the relative profit of asphalt is low, the absolute profit and demand show a recovery trend month-on-month, which is expected to boost the supply of asphalt. It is expected that the output of asphalt will continue to increase from September to November.
C Traditional demand enters peak season
This year, the special debt quota was completed ahead of schedule. Against the background of steady growth, infrastructure investment is supported by policies. According to the requirements of the Ministry of Finance, the issuance of new special bonds this year should be completed by the end of June and used by the end of August. From January to June this year, the cumulative issuance of local government special bonds reached 3.4 trillion yuan, and the cumulative completion progress reached 93%, basically completing the task of issuing special bonds. The issuance of local bonds in July was dominated by refinancing general bonds. The newly added special bonds accounted for 15.6% of the total issuance of local bonds in the month, which were mainly invested in transportation infrastructure construction, municipal and industrial park infrastructure construction and affordable housing projects.
The Ministry of Finance stated that in the second half of the year, firstly, it will continue to provide guidance to local governments and urge localities to do a good job in finalizing the issuance of special bonds; the second is to urge local governments to allocate special bond funds in a timely manner, consolidate the responsibilities of project units, and promote the formation of special bonds as soon as possible. quantity. The industry generally believes that the use of the existing special debt quota will become the next fiscal policy trend. Although the state has given greater support to infrastructure investment this year, the overall efficiency is slightly lower in terms of the transformation from infrastructure to demand. On the one hand, local government special debts are mostly used to make up for fiscal deficits; on the other hand, infrastructure investment tends to be new infrastructure, with a large proportion of water conservancy and public facilities, etc., while the proportion of investment in traditional infrastructure such as roads and railways is relatively small. , the driving effect on the demand for steel, cement, asphalt, etc. is weak. In addition, except for asphalt, the prices of paving materials such as cement and gravel have risen significantly this year, which has affected the transformation of infrastructure investment into actual demand to a certain extent. As of July, the accumulated investment in infrastructure construction has increased by 9.58% year-on-year, but the investment in the road transportation industry has decreased by 2% year-on-year, and the apparent demand for asphalt from January to July has dropped by 26% year-on-year, indicating a split between infrastructure investment and asphalt demand. . From the perspective of the market outlook, infrastructure investment is still expected, but due to the low efficiency of use and the high price of construction raw materials inhibiting project construction, the effect of infrastructure on asphalt consumption is relatively limited.
Road demand increases seasonally. Road asphalt consumption is the main area of asphalt consumption. At present, road asphalt consumption accounts for 75% of the total asphalt consumption. In the first half of this year, under the background of the spread of the epidemic and the rising cost of paving, the overall road construction projects were relatively few and there were many delayed construction projects, and the demand for asphalt roads was sluggish. From a seasonal point of view, entering September, with the narrowing of the rainfall range, highway projects will be concentrated in construction, asphalt consumption will enter the peak season, and demand will improve, but it is expected to be slightly lower than the same period in previous years.
Demand for waterproofing has been suppressed. In recent years, the demand for asphalt waterproofing has grown rapidly. At present, the demand for waterproofing accounts for 20% of the total demand for asphalt. Last year, the cumulative output of bitumen and modified bitumen waterproofing membranes was 2.96 billion square meters, an increase of 18% year-on-year. Waterproofing membranes are mainly used in building walls, roofs, roads and other fields to prevent leakage. The demand for waterproofing membranes is directly related to the development of the real estate market. From January to July, the accumulated investment in real estate development decreased by 6.4% year-on-year, and the cumulative area of new housing construction decreased by 36.1% year-on-year, which suppressed the demand for waterproofing membranes to a certain extent, and thus suppressed the waterproofing demand for asphalt. In the context of the limited overall growth of the real estate market, the increase in demand for asphalt waterproofing in the second half of the year is also relatively limited.
D Inventory remains at medium-low level
According to the statistics of Longzhong Information’s sample data, as of September 14, the asphalt inventory has declined for 4 consecutive months, and the total inventory has dropped to 1.638 million tons, of which 70 sample enterprises have a total inventory of 692,000 tons, and 54 sample factories have a total inventory of 692,000 tons. 946,000 tons. Judging from the data of the past 1 month, the asphalt social inventory is still declining, but the refinery inventory is stable. On the one hand, with the improvement of profits and the recovery of demand, the output of refineries has increased; on the other hand, the performance of terminal consumption is average, and traders are not very motivated to stock up and purchase more on demand, which has led to a slowdown in refinery shipments compared with the previous period. Looking at the market outlook, under the background of seasonally booming consumption, terminal traders have a certain demand for replenishment, but the current supply of refineries has increased significantly, which has hedged the demand for downstream replenishment, so the asphalt inventory in the peak consumption season will remain at a medium-low level.
To sum up, profits and demand have been restored, and the supply of asphalt has continued to recover. It is expected that the output from September to November will reach a high level this year. At the same time, starting from September, consumption has entered the traditional peak season, but capital is tight and paving costs are rising, road project construction has been restrained to a certain extent, asphalt consumption performance is average, traders are more cautious in purchasing, and the overall inventory is at a low and medium level, and we will pay attention to peak season demand later degree of fulfillment. From the perspective of price trends, the unilateral market of asphalt is still driven by cost. It is expected that the space above crude oil prices will be limited. If the center of gravity of oil prices moves down again, asphalt will follow.(Author: Founder Medium-term Futures)
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