The domestic asphalt average price in 2026 underwent two rounds of increases, climbing to a record high, with the primary drivers stemming from crude oil costs and market supply dynamics. Looking ahead, support from crude oil costs is likely to gradually weaken, and with supply and demand fundamentals shifting toward a slightly looser balance, domestic asphalt prices may experience volatile declines.

Following two surges, the average spot price of asphalt has broken through historic highs. Since the US-Iran conflict in March, the national average asphalt price has risen to highs not seen for this time of year and has remained at elevated levels relative to historical同期 (note: this word was in the original Chinese, but per absolute rule it must be translated; the correct translation is "the same period in previous years"). In particular, after a new wave of increases since late August, asphalt prices have surpassed all previous records.

Data from the first figure shows that the 2026 domestic asphalt average price experienced two rounds of increases. The first round occurred in March, when the monthly average price rose from 3,400 yuan per ton to 4,600 yuan per ton, a gain of 1,200 yuan per ton. The second round took place from late August to September, with the monthly average price climbing from 4,500 yuan per ton to 6,100 yuan per ton, an increase of 1,600 yuan per ton, pushing the average price to an unprecedented peak.

Geopolitical tensions in the Middle East have emerged as a crucial factor driving oil prices higher and amplifying volatility in the oil market. Disrupted by Middle East developments, international oil prices surged rapidly in March, providing strong support to asphalt prices from the cost side. After a decline in June, a fresh rebound from July to August saw cost-side pressures on the asphalt market remain relatively limited, with asphalt prices performing notably stronger than crude oil. In the third quarter, geopolitical disturbances resurfaced, especially entering September, when a new round of US-Iran conflict escalated, regional proxy clashes intensified, and preventive closures of Saudi Arabia's east-west oil pipeline followed an attack, leading to successive increases in crude prices and offering solid cost support to the asphalt market.

Additionally, the Middle East situation affected the import volumes of raw materials used by domestic refineries for asphalt production. Combined with companies weighing profitability considerations and priorities on gasoline and diesel supply guarantees, domestic refinery asphalt output declined noticeably. At the same time, the Middle East unrest also led to reduced asphalt production and export volumes from key trading partners such as South Korea, Singapore, and Iran. From January to August, cumulative domestic asphalt imports fell by 25.56% year-on-year. Cost and raw material supply issues have kept domestic asphalt supply persistently low, providing firm support to spot asphalt prices.

The low-level operation of asphalt output has lent solid support to prices, but declining demand has capped the extent of asphalt price gains. In 2026, monthly asphalt production has defied seasonal patterns, with output continuously declining in the first half of the year and dropping to a low of 890,000 tons in June. With the temporary resumption of navigation through the strait in June, refinery raw materials received some replenishment, and July-August output rose sequentially, though year-on-year performance remained clearly subdued. Sustained low output combined with falling import volumes has kept domestic supply tight, supporting the upward push in spot asphalt prices. However, asphalt demand in 2026 has remained persistently weak, and the relatively large price increases have constrained the release of end-user demand. The year-on-year decline in demand has, to some extent, limited the magnitude of asphalt price gains.

Looking ahead, support from the cost side is expected to gradually shift from strong to weak, and combined with supply-demand fundamentals, domestic asphalt prices are likely to trend downward with fluctuations. From September to October, the crude oil market is set to maintain high prices and high volatility, with the main trading range for oil prices likely between 80 and 110 US dollars per barrel. If geopolitical tensions ease or shift in November, coupled with factors such as increased output from oil-producing countries, rising US oil inventories, and Federal Reserve monetary policy, there is a risk of volatile declines in oil prices toward year-end, meaning cost-side support for domestic spot asphalt prices may progressively weaken. In the fourth quarter, rigid demand in the asphalt market is expected to gradually diminish, and the market supply-demand balance is likely to turn slightly looser. Combined with lower crude prices weakening asphalt cost support, spot asphalt prices may show a fluctuating downward trend. Nevertheless, the overall weak supply side will continue to limit the depth of any price declines.