News summary

China's asphalt production fell 3% in April80svideogames, local refineries reduced production due to low profits; profits improved in May, and output is expected to increase slightly. However, weak demand limits output growth, and output in May is expected to be between 2.25 million and 2.3 million tons.

Newsletter text

[Asphalt output fell month-on-month in April and is expected to pick up in May] In April 2019, China's total asphalt output recorded 226.80svideogames.3,400 tons, down 3% from March, or 69,900 tons. During this period, international oil prices continued to fluctuate at high levels, and asphalt costs were strongly supported, but at the same time production profits remained low during the year. The average asphalt production profit of local refineries was minus 1,048.90 yuan/ton, a month-on-month decrease of 62.54 yuan/ton, which prompted local refineries to further reduce their enthusiasm for asphalt production. The asphalt output of local refineries decreased to 1.02 million tons in April, a decrease of 160,000 tons month-on-month. Some refineries reduced production loads or suspended production due to factors such as profits and shipments. At the same time, the output of the main refineries increased month-on-month. Sinopec and PetroChina's output increased by 65,000 tons and 40,000 tons respectively in April. Refineries with significant growth include Guangzhou Petrochemical, Qilu Petrochemical, Jinan Refining and Chemical and Yunnan Petrochemical. Entering May, with the moderate correction of international oil prices and the decline in premium prices of diluted asphalt, the pressure on asphalt production costs has been alleviated and the production profits of local refineries have improved. This change may prompt local refineries that have resumed production of asphalt, while some refineries that have previously stopped production are expected to resume production. However, due to project planning and funding constraints, the number of road projects started this year was limited, resulting in poor performance of rigid demand for asphalt, and traders 'shipments dropped by 30%-50% year-on-year. In addition, social inventory pressure is high, and it is expected that the asphalt production of main refineries in May may drop by 100,000 to 120,000 tons month-on-month. This limits the growth space for asphalt production in May, and production may remain at around 2.25 - 2.3 million tons.