BU's 2603 main contract rebounded from intraday lows before retreating in late trading, largely mirroring oil price dynamics. It closed at 3,139 yuan, down 0.1% from the previous close, after hitting a session high of 3,156 and a low of 3,124. Over the past seven days, the contract has declined 1.0% on a closing price basis. The next-month contract 2606 fell 0.09% from yesterday's close.
In the spot market, Shandong's heavy-duty asphalt price stood at 3,070 yuan per ton, down 0.3% from the previous day and 0.3% over seven days. The Shandong basis spread was -69 yuan per ton, narrowing by 7 yuan over the week. East China's heavy-duty asphalt price held steady at 3,200 yuan per ton, with the basis spread at +61 yuan per ton, widening by 42 yuan over seven days.
The BU-Brent crack spread recorded -138 yuan per ton, weakening by 43 yuan over seven days. While BU's main contract dipped 0.1%, Brent crude rose 1.3% (based on 3:00 PM closing prices). Geopolitical uncertainties surrounding the U.S. and Iran continue to inject volatility into oil prices, warranting a cautious view on crack spreads.
East China's high-end heavy-duty asphalt price remained unchanged at 3,230 yuan per ton on January 20, with the low-end price also steady at 3,150 yuan per ton. Snowy conditions in northern regions have subdued spot market activity, leaving fundamentals largely unchanged with limited price movements.
Crude oil is currently experiencing wide fluctuations, with geopolitical factors dominating market focus. Ongoing U.S.-Iran tensions suggest continued volatility, though geopolitical risks are expected to remain the key driver for oil markets in the near term. Given the heightened sensitivity of the front-month 03 contract to upstream oil price swings, a short-term bullish outlook is warranted for the March contract (assuming escalating geopolitical risks).
For deferred contracts, improved global supply-demand balances, China's peak construction season, and ample Merey crude supply support a bullish case for the 06 contract on dips. Should macro-driven price surges subside, oil markets may revert to looser fundamentals, dragging asphalt lower. Considering Q1 oil oversupply, sufficient domestic Merey crude availability, and asphalt inventories lasting through February, a 3-6 calendar spread strategy is recommended, alongside potential crack spread longs depending on market conditions.
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