Report Summary 1) Report Industry Investment Rating - The investment rating for the asphalt industry is "shockingly weak" for the unilateral strategy, while there are no ratings for the inter - period, cross - variety, spot - futures, and options strategies [2] 2) Core View of the Report - The asphalt market has slow inventory reduction and insufficient positive drivers. The overall fundamentals are average, and the market may continue to operate with weak shocks. The cost - side drive is limited due to the weak fundamentals of crude oil, and locally, the supply growth is stronger than the terminal demand, leading to a thick market wait - and - see sentiment [1] 3) Summaries According to Related Contents Market Analysis - On September 18, the closing price of the main asphalt futures contract BU2511 in the afternoon session was 3,427 yuan/ton, down 12 yuan/ton or 0.35% from the previous settlement price. The open interest was 233,261 lots, a decrease of 329 lots from the previous day, and the trading volume was 151,997 lots, an increase of 10,727 lots [1] - The spot settlement prices of heavy - traffic asphalt from Zhuochuang Information are as follows: 3,886 - 4,086 yuan/ton in the Northeast, 3,480 - 3,770 yuan/ton in Shandong, 3,480 - 3,540 yuan/ton in South China, and 3,550 - 3,650 yuan/ton in East China. The asphalt prices in the Northwest and North China markets rose yesterday, while the prices in other regions remained generally stable [1] Strategy - Unilateral: Shockingly weak; Inter - period: None; Cross - variety: None; Spot - futures: None; Options: None [2] Graphical Data - There are multiple graphs showing various aspects of the asphalt market, including spot prices in different regions (Shandong, East China, South China, North China, Southwest, and Northwest), futures prices (index, main contract, near - month contract, and near - month spread), trading volume and open interest of futures, domestic weekly asphalt production, production from independent refineries and in different regions (Shandong, East China, South China, North China), domestic asphalt consumption in different fields (road, waterproofing, coking, ship fuel), and asphalt inventories in refineries and society (according to Longzhong's data) [3]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - In August, the asphalt market showed a situation of weak supply and demand. The weakening asphalt cracking spread led to a decline in production, and heavy rainfall affected terminal construction, keeping social inventory at a high level. Geopolitical factors drove oil prices, but the market was desensitized to unfulfilled sanctions. With the asphalt demand ending and no seasonal increase in supply, the market lacks clear direction. The asphalt price is expected to fluctuate around crude oil, with limited upside potential for oil prices due to long - term supply surplus expectations, but supported by shale oil costs and geopolitical disturbances. The price is expected to continue a wide - range oscillatory trend, and the BU2510 contract can be monitored in the range of 3400 - 3630 yuan/ton [68]. 3. Summary by Directory 3.1 Market Review - In August, the asphalt futures price showed a weakening trend. The asphalt fundamentals had characteristics of increasing supply and decreasing demand. The output increased with the rising refinery operating rate, while demand weakened due to heavy rainfall. The social inventory remained at a high level, and the weakening fundamentals and downward cost drivers jointly led to the weakening of the asphalt futures price [6]. 3.2 Macroeconomic Analysis - **Geopolitical Factors**: The US - Russia "Putin - Trump meeting" in August initially alleviated market concerns about supply shortages, causing the risk premium of crude oil to decline rapidly. Subsequently, Trump's threat of sanctions reignited market concerns about supply disruptions, supporting oil prices to some extent. However, due to the non - implementation of previous sanctions, the market was desensitized, and the upside space for oil prices was limited. The Russia - Ukraine conflict is difficult to resolve in the short term, and geopolitical uncertainties will continuously interfere with crude oil supply expectations [8]. - **US Economic Data**: The US July non - farm payrolls data was lower than expected, and the data for May and June were revised downward. After the release of the employment data, the probability of the Fed cutting interest rates at the next meeting increased. The July CPI data was generally in line with expectations, with the core CPI reaching the highest level since February [11]. 3.3 Supply and Demand Analysis - **OPEC+**: OPEC+ will continue to increase production in September, with a production adjustment of 547,000 barrels per day. The market has fully priced in the production increase, but the focus is on the speed and scale of implementation. It is expected that the production increase will be realized by the end of the fourth quarter. Kazakhstan failed to effectively implement production cuts in July, which may lead to the ineffectiveness of the production cut agreement among OPEC+ members and raise concerns about internal price wars [13][14][15]. - **Supply Forecasts by Institutions**: In August, IEA, EIA, and OPEC had different views on global crude oil supply and demand growth expectations. IEA raised the supply growth forecast by 400,000 barrels per day and lowered the demand growth forecast by 19,000 barrels per day, holding a pessimistic outlook. EIA and OPEC maintained their previous forecasts, expecting an improvement in demand due to the easing of global trade tensions [17]. - **Domestic Asphalt Supply**: In August, the domestic asphalt cumulative output was 2.45 million tons, a month - on - month decrease of 100,000 tons, or 3.9%. The operating rate of domestic asphalt sample enterprises was 29.3% as of August 27th, a decrease of 1.4 percentage points from the previous statistical period and 3.7 percentage points from the same period last month. The decline in cracking spread and heavy rainfall affected refinery production and operating rates [20][29]. - **Domestic Asphalt Demand**: In August, the domestic asphalt shipment volume was 1.79 million tons, a month - on - month decrease of 77,000 tons. The weekly shipment volume increased after the rainfall ended. As of August 29th, the weekly capacity utilization rate of domestic modified asphalt was 17.14%, a month - on - month increase of 0.9 percentage points, but the long - term demand growth space is limited [30][33]. - **Trade**: In July, the domestic asphalt imports were 380,500 tons, a month - on - month increase of 4,800 tons and a year - on - year increase of 16.53%. The cumulative imports from January to July were 2.1055 million tons, a cumulative year - on - year decrease of 7.50%. The exports in July were 55,700 tons, a month - on - month increase of 26,200 tons. The cumulative exports from January to July were 334,900 tons, a cumulative year - on - year increase of 46.45% [40][43]. - **Inventory**: As of August 29th, the factory inventory of domestic asphalt sample enterprises was 674,000 tons, a week - on - week decrease of 42,000 tons and a decrease of 26,000 tons from the same period last month. The social inventory was 1.27 million tons, a week - on - week decrease of 22,000 tons and a decrease of 73,000 tons from the same period last month. The social inventory was still at a high level [52][59]. - **Price Spreads**: As of August 29th, the weekly profit of domestic asphalt processing dilution was - 593.1 yuan/ton, a month - on - month decrease of 118.4 yuan/ton. The asphalt basis was 197 yuan/ton, and as of August 25th, the asphalt - to - crude oil ratio was 54.25. The asphalt cracking spread showed a narrow - range oscillation, and the basis first weakened and then strengthened, indicating weak demand support for prices [66]. 3.4 Market Outlook - In August, the domestic asphalt market had a weak supply - demand situation. The market is expected to continue to fluctuate around crude oil prices, with a wide - range oscillatory trend. The BU2510 contract can be monitored in the range of 3400 - 3630 yuan/ton [68].

Group 1 - The core viewpoint is that asphalt prices have been experiencing a downward trend since August, influenced by various factors, and the current production profits remain relatively high, indicating potential further declines in spot prices [1][6]. - International crude oil prices have been declining since August, with major crude futures prices dropping by $5.69 and $5.30 per barrel, representing declines of 7.85% and 8.74% respectively, which negatively impacts asphalt costs [1][3]. - As of August 20, the national average price of asphalt was 3789.43 yuan per ton, down 69.57 yuan per ton or 1.80% from the end of July, with Shandong's average price at 3660 yuan per ton, down 195 yuan per ton or 5.06% [1][3]. Group 2 - Despite the decline in asphalt prices, the production profitability has seen limited decreases, with theoretical profits for various refineries showing mixed results; for instance, Shandong's refineries reported a profit of -367.02 yuan per ton, down 20.83 yuan per ton, while Jiangsu's main refineries reported a profit of 548.16 yuan per ton, up 58.85 yuan per ton [3][5]. - The overall production income for asphalt has decreased by 3.96%, but this is significantly lower than the 12.57% drop in raw material costs, indicating that other products' smaller declines have mitigated the impact of falling asphalt prices on refining revenues [3][5]. - The market outlook suggests that downstream demand for asphalt remains weak, with slow inventory depletion and a pessimistic outlook on demand, while refinery production remains high, indicating a potentially oversupplied market [5][6].

Report Industry Investment Rating - Not provided in the content Core Viewpoint - In July, the domestic asphalt market fundamentals weakened marginally. Supply pressure increased due to the expected third - quarter terminal rush and high asphalt cracking spreads, while demand decreased because of weather - related construction disruptions. Socially - held inventories remained at a high level, suppressing prices. Macro improvements had limited support for the market. Cost - driven factors led to a short - term strengthening of oil prices, which in turn drove the asphalt market. Currently, the asphalt market lacks a core driving factor and is mainly influenced by crude oil. Given the medium - to long - term expectation of crude oil supply surplus, the asphalt price is expected to continue to fluctuate widely. For trading strategies, pay attention to the pressure range of 3700 - 3750 for the BU2510 contract, and consider short - selling if US sanctions on Russia are lower than market expectations [69]. Summary by Directory 01 Market Review - In July, the asphalt futures price fluctuated widely. On one hand, the asphalt fundamentals showed a pattern of increasing supply and decreasing demand. Asphalt production continued to rise as refinery operating rates increased, while demand weakened due to the typhoon season in the southern region. Social inventories remained at a high level, suppressing prices. On the other hand, the marginal improvement in the supply and demand of crude oil supported oil prices. In the context of less prominent fundamental contradictions, the cost was the main influencing factor for asphalt prices [6]. 02 Macro Analysis - **Trade Agreements**: Sino - US economic and trade talks were held in Stockholm, and both sides agreed to extend the suspension of part of the US reciprocal tariffs and Chinese counter - measures for 90 days. The US reached trade agreements with the EU, Japan, etc., and also imposed new tariffs on South Korea, India, and Brazil. In the short term, trade tensions were effectively alleviated, which supported oil prices to some extent. However, the long - term impact on the global economy remains uncertain [8]. - **Fed's Interest - Rate Decision**: The Fed kept the federal funds rate unchanged at 4.25% - 4.50%, in line with market expectations. Two Fed officials opposed the decision, indicating a weakening of internal consensus. Fed Chairman Powell's speech was hawkish, and the probability of a September interest - rate cut decreased. The interest - rate decision and Powell's speech added uncertainty to the future interest - rate adjustment rhythm [12]. - **Geopolitical Tensions**: US President Trump set a deadline for Russia to reach a peace agreement with Ukraine and threatened sanctions if the goal was not achieved. The US also imposed large - scale sanctions on Iran. These events raised concerns about the supply side of the market and supported the recent strengthening of oil prices [13]. 03 Supply - Demand Analysis - **OPEC+ Production**: OPEC+ unexpectedly increased production by 548,000 barrels per day in August, and the market expects a continued increase in September to reach the target of restoring 2.2 million barrels per day of production. The market has fully priced in the OPEC+ production increase, and the key lies in the speed and scale of the increase. It is expected that this round of production increase will be completed by the end of the fourth quarter. Additionally, Kazakhstan's production exceeded the quota, raising concerns about OPEC+ internal price competition [16][17]. - **IEA, EIA, and OPEC Forecasts**: In July, IEA, EIA, and OPEC had different expectations for global crude oil supply and demand growth. IEA raised the supply growth forecast by 300,000 barrels per day and lowered the demand growth forecast by 16,000 barrels per day, maintaining a pessimistic outlook. EIA and OPEC maintained their previous forecasts, expecting demand improvement due to the easing of global trade tensions [19]. - **Domestic Asphalt Supply**: In July, domestic asphalt production was 2.55 million tons, a month - on - month increase of 234,000 tons or 10.5%. The operating rate of domestic refineries increased, with significant increases in the East China and Shandong regions. The asphalt cracking spread fluctuated, and the expected third - quarter terminal rush demand drove the refinery operating rate to rise, increasing supply pressure [21][29]. - **Domestic Asphalt Demand**: In July, domestic asphalt shipments were 1.867 million tons, a month - on - month decrease of 88,000 tons. Rainy weather restricted terminal construction, weakening demand. As the rainy season ended, shipments increased week - on - week. The utilization rate of modified asphalt production capacity increased, but the long - term growth space is limited [30][33]. - **Import and Export**: In June, domestic asphalt imports were 375,700 tons, a month - on - month decrease of 22,000 tons or 5.51%, and a year - on - year increase of 32.56%. Exports were 29,700 tons, a month - on - month decrease of 25,600 tons. From January to June, cumulative imports decreased by 11.53% year - on - year, while cumulative exports increased by 53.36% year - on - year [40][43]. - **Inventory**: As of August 1, the factory inventory of domestic asphalt sample enterprises was 700,000 tons, a week - on - week decrease of 23,000 tons. The social inventory was 1.343 million tons, a week - on - week decrease of 9,000 tons. Factory inventory decreased slightly due to lower production and increased terminal construction, while social inventory increased slightly due to weak demand and remained at a high level [52][57]. - **Price Spread**: As of August 1, the weekly profit of domestic asphalt processing was - 551.7 yuan/ton, a month - on - month decrease of 37.5 yuan/ton. The asphalt basis was 76 yuan/ton, and the asphalt - to - crude oil ratio was 57.25 as of July 31. The asphalt cracking spread weakened, and the basis first strengthened and then weakened, indicating weak price support from the demand side [67].

Report Industry Investment Ratings - Crude oil: ★★★, indicating a clearer long - trend and a relatively appropriate investment opportunity [1] - Fuel oil: ★★★, indicating a clearer long - trend and a relatively appropriate investment opportunity [1] - Low - sulfur fuel oil: ★★★, indicating a clearer long - trend and a relatively appropriate investment opportunity [1] - Asphalt: ★★★, indicating a clearer long - trend and a relatively appropriate investment opportunity [1] - Liquefied petroleum gas: ★☆☆, representing a bias towards a short - trend, with a driving force for a downward trend, but limited operability on the market [1] Core Views - The rapid production increase by OPEC+ has limited impact on oil prices in Q3. After the Q3 peak season, if the US equivalent tariff policy continues, oil prices may decline. Other energy products have their own supply - demand characteristics and short - term trends [2][3][4] Summary by Category Crude Oil - OPEC+ decided to increase production by 548,000 barrels per day in August, exceeding market expectations. The actual monthly production increase of OPEC+ is less than the target increase. In Q3, the increase can be well absorbed by demand. After Q3, if the US tariff policy continues, oil prices may decline. Short - term view is that the bottom of oil prices will rise in Q3 [2] Fuel Oil & Low - Sulfur Fuel Oil - Crude oil opening weak drove fuel - related futures down. High - sulfur fuel oil demand is low, and its price and cracking spread are weakening. Low - sulfur fuel oil has limited short - term supply pressure due to the coking profit and diesel cracking strength, but demand lacks a clear driver, with short - term cracking spread expected to be slightly stronger [2] Asphalt - With the decline of oil prices, asphalt prices also dropped. The shipment volume of 54 sample refineries decreased slightly, and the cumulative year - on - year increase dropped from 8% to 7%. Demand recovery is delayed, refinery inventory increased by 15,000 tons, and social inventory remained flat. The short - term trend is to fluctuate [3] LPG - The international market supply is loose, and overseas prices may be under pressure. Last week's new maintenance led to a decline in chemical demand, but the decline in import costs promoted the repair of PDH profit margins. In summer, supply pressure increases, and the market trend is weak [4]

1. Report Industry Investment Rating - The report does not mention the industry investment rating. 2. Core Viewpoints of the Report - The domestic asphalt market shows marginal improvements in supply and demand, but fundamental pressures remain. The supply continues to increase, with a 4% month - on - month increase in April production. The demand shows initial signs of recovery, with a 15.5% month - on - month increase in April asphalt shipments. The macro situation has short - term marginal improvements, but long - term uncertainties persist. The cost of asphalt is supported by the short - term crude oil market. Overall, the asphalt price is likely to fluctuate within a range. It is recommended to focus on the BU2506 contract in the range of 3340 - 3550 yuan/ton and choose to short on rebounds [71]. 3. Summary by Directory 3.1 Market Review - In April, asphalt prices first declined and then rebounded, showing a significant overall decline. Affected by macro negatives and OPEC+ unexpected production increases during the Tomb - Sweeping Festival, the outer - market crude oil prices dropped sharply, causing asphalt to open at the daily limit down on the first trading day after the holiday and reach a new low for the year. In the middle and late April, as the macro - pessimistic sentiment eased and OPEC+ expanded compensatory production cuts, oil prices were supported, and asphalt prices rebounded and fluctuated widely [6]. 3.2 Macroeconomic Analysis 3.2.1 Divergence in Interest - Rate Cut Expectations - The Fed is likely to continue to pause interest - rate cuts due to high economic uncertainties and inflation risks. After the release of the March CPI data, traders increased bets on a 100 - basis - point interest - rate cut by the Fed by the end of the year. However, Fed Chairman Powell's "hawkish" speech reduced market expectations for interest - rate cuts. The market generally expects the Fed to start cutting rates in June and cut rates 3 - 4 times by the end of 2025, with a cumulative cut of 75 - 100 basis points. The difference in expectations between the market and the Fed may lead to increased volatility in risk assets [9][10]. 3.2.2 Tariff Pressures - In April, the Trump administration's tariff policies led to macro negatives and increased global economic uncertainties. The suspension of the implementation of reciprocal tariffs on April 10 eased the pessimistic sentiment to some extent, but the uncertainty of tariff policies still impacts the market and investor confidence [11]. 3.2.3 OPEC+ Actions - In April, eight OPEC+ members announced a production increase of 411,000 barrels per day in May. At the same time, an updated compensatory production - cut plan was announced, with an increase of 369,000 barrels per day in the cumulative production - cut scale. However, due to Kazakhstan's production policies and potential issues with production - cut implementation efficiency, the actual effect of the compensatory production cuts remains to be seen [15]. 3.3 Supply - Demand Analysis 3.3.1 Supply - As of April 25, the cumulative asphalt production in April was 1.752 million tons, a 4% month - on - month increase and a 5.8% year - on - year increase. The refinery operating rate has rebounded, and the supply is under pressure. As of April 23, the operating rate of domestic asphalt sample enterprises was 30.7%, up 2 percentage points from the previous period, with significant increases in Shandong, Central, and North China regions [16][24]. 3.3.2 Demand - As of April 25, the asphalt shipments in April were 1.371 million tons, a 15.5% month - on - month increase. The demand is gradually recovering, but the growth rate is lower than the supply growth rate. In the first quarter of 2025, the cumulative investment in domestic transportation fixed assets increased by 5.2% year - on - year. The utilization rate of modified asphalt production capacity has rebounded, which is expected to support asphalt demand [25][32][33]. 3.3.3 Import and Export - In March, domestic asphalt imports were 264,000 tons, a month - on - month increase but a year - on - year decrease. The average import price decreased. Exports were 62,800 tons, a month - on - month increase, and the average export price also decreased [42][45]. 3.3.4 Inventory - As of April 25, the factory inventory of domestic asphalt sample enterprises decreased by 15,000 tons week - on - week, while the social inventory increased by 28,000 tons week - on - week to 4.211 million tons, with a growth rate of 2.01% [55][62]. 3.3.5 Price Spread - As of April 25, the domestic asphalt processing dilution weekly profit was - 619.8 yuan/ton, a week - on - week decrease of 157.8 yuan/ton. The asphalt - to - crude - oil ratio rebounded to 55.76 as of April 28. There is a risk of further decline in processing dilution profit [69].