Falling Costs and Rising Supply Outlook to Send Asphalt Prices on a Volatile Downward Trajectory in H2

In the first half of the year, buoyed by dual bullish factors of high production costs and tight supply, spot asphalt prices kept climbing nationwide. The national average asphalt price once neared the peak recorded in June 2022 after the Russia-Ukraine conflict. However, following the signing of the US-Iran peace agreement and the resumption of shipping through the Strait of Hormuz, production costs will drop and supply is expected to rebound. As a result, asphalt prices will fluctuate downward throughout the second half of the year.

National Average Asphalt Prices Surged Sharply Before Stagnating at High Levels

Driven by rising costs and shrinking supply in the first half of 2026, China’s average asphalt price jumped sharply and then fluctuated at elevated levels.

The national average asphalt price from January to June stood at 4,120.48 yuan per ton, up 351.56 yuan per ton or 9.33% year-on-year. The highest price of the first half hit 4,717.86 yuan per ton on June 15, while the lowest stood at 3,226.86 yuan per ton on January 4.

The price fluctuation range reached 1,491 yuan per ton in H1, marking a notable year-on-year expansion. Historically, asphalt prices traded at the lower-middle range of the five-year average from January to February. Driven by steep price hikes, prices moved to the upper range of the five-year average between April and June.

Soaring Raw Material Costs Provided Strong Support to Asphalt Prices

Geopolitical risks dominated market sentiment across the first half of 2026. The average WTI crude oil price for H1 hit USD 82.97 per barrel, rising USD 15.41 per barrel, or 22.81%, year-on-year. As the direct upstream feedstock of asphalt, surging international crude oil prices delivered solid cost-side support for asphalt.

From February to March, escalating tensions, friction and shipping blockades between the US and Iran pushed international oil prices sharply higher. Boosted by risk premiums and supply fears, WTI once climbed to USD 119 per barrel. Between April and June, oil prices swung wildly at high levels amid conflicting expectations of a ceasefire and actual supply cuts.

In H1, revenue growth from asphalt products failed to outpace cost inflation, leaving refiners with consistent production losses. From January to June, local refineries recorded an average loss of 190.39 yuan per ton from crude-to-asphalt processing, a year-on-year slump of 677.63%. Major refineries in Jiangsu posted an average loss of 251.69 yuan per ton, down 158.37% year-on-year. Persistent losses dampened refiners’ willingness to produce asphalt.

Sustained Output Cuts Tightened Supply and Underpinned Prices

Surging costs and persistent asphalt manufacturing losses curbed refiners’ production enthusiasm. In addition, unrest in South America and ongoing geopolitical tensions in the Middle East created tight feedstock supplies for both local and major state-owned refineries. Most refiners drew down existing raw material inventories, and falling stockpiles drove a continuous decline in asphalt plant operating rates in H1 2026.

The average asphalt plant utilization rate from January to June was 22.30%, down 13.09 percentage points year-on-year. Driven by lower operating rates, China’s asphalt output totalled 8.7851 million tons in H1, a year-on-year drop of 4.2472 million tons, or 32.59%. Monthly output moved against seasonal trends and fell month by month, hitting the lowest single-month volume. Tighter market supply further supported asphalt prices.

Volatile Downward Trend Forecast for Asphalt Prices in H2

The sharp rally in national average asphalt prices in H1 stemmed mainly from climbing crude costs and shrinking supply. Conditions will shift in the second half. The US-Iran peace accord and resumed shipping through the Strait of Hormuz will trigger a broad correction in international oil prices and gradually ease feedstock shortages. Lower asphalt production costs and expected supply increases will turn H1 bullish drivers into bearish pressures in H2.

Although H2 is the traditional peak construction season with expected demand improvements, rigid asphalt demand will likely lag behind last year’s level. This is the first year of the 15th Five-Year Plan, with lighter road opening targets, while downstream end users continue to face funding constraints.

Overall, China’s average asphalt price is projected to fluctuate downward in H2. The magnitude and speed of price falls will largely depend on the pace of supply recovery. The monthly average price peak in H2 will reach 4,400 yuan per ton in July, and the trough will fall to 3,980 yuan per ton in December.