CITIC Futures: Geopolitical disturbances, asphalt futures fluctuate within a wide range

Geopolitical tensions remain the core influencing factor on current oil prices, with crude oil fluctuating at high levels, asphalt futures experiencing wide-range volatility, and the asphalt-fuel price spread rebounding. The key factors are sustained refinery production cuts and cooling of geopolitical premiums. Considering that asphalt’s geopolitical attributes are weaker than those of fuel, during geopolitical tensions, the asphalt-fuel spread tends to decline, while easing tensions lead to a rebound in the spread. With high refining profit margins and a trend of reducing chemical production while increasing fuel output, asphalt supply is expected to be diverted. On the demand side, fixed asset investment in transportation is experiencing negative growth. Data from Steel Union shows that asphalt refinery operating rates are at a five-year low, with inventory accumulation, indicating weak asphalt demand. Currently, asphalt futures are undervalued compared to fuel and overvalued relative to rebar. (CITIC Futures)