1. Trend analysis

As of this week (20231133-29), the capacity utilization rate of China’s asphalt refinery was 36.8%, down 1.1 percentage points from the previous week, and the weekly output of asphalt was 626,000 tons, down 2.19% from the previous week, mainly due to the intermittent shutdown of Hebei Kaiyi, Jingbo Hainan, Jiangsu Xinhai and Yangzi Petrochemical, and the slight production reduction of KPEC and Panjin Beili. Suppressed capacity utilization declined.

Second, seasonal analysis

According to Longzhong data, asphalt production is at a medium high level, but the utilization rate of asphalt capacity is at a low level, and the high output is mainly because the domestic asphalt production capacity continues to increase in 2023, of which the new production capacity totaled 7.6 million tons/year, an increase of 700,000 tons/year or 9.2%, with the release of new production capacity, the overall asphalt production in 2023 is at a medium high level. Secondly, from the comparison of weekly production in the fourth quarter, asphalt production in 2022 is at a high level, mainly because refinery production profits in the second half of 2022 are significantly improved, driving a substantial increase in asphalt production. The low trend of asphalt capacity utilization is mainly due to the fact that on the one hand, the overall market demand this year is less than expected, and on the other hand, refinery production profits have narrowed significantly, which has suppressed refinery production enthusiasm, resulting in too low capacity utilization trend.

Third, trend forecast

It is expected that the capacity utilization rate of China’s asphalt refinery will rise by 0.7 percentage points to 37.5% next week, mainly due to the intermittent resumption of asphalt production in East China Yangtze and Jiangsu Xinhai next week, and the above two enterprises are in intermittent production throughout the year, driving the capacity utilization rate to rise.