As an important downstream product in the refining and chemical industry chain, asphalt production profits are influenced by multiple factors including feedstock structure, yield levels, and market supply and demand. Currently, the cost difference between independent refineries processing crude oil versus processing diluted asphalt is significant. Furthermore, the different types of crude oil processed by independent refineries and state-owned refineries affect their asphalt yield, leading to profit divergence. Ultimately, raw material differences dominate the split in asphalt production margins.
The core difference in feedstock for domestic independent refineries lies in the acquisition of crude oil import quotas, dividing them into two camps: those processing heavy crude oil and those processing diluted asphalt. This is significantly affected by feedstock import regulatory policies. Since June 2021, adjustments to import regulations on diluted asphalt in China, bringing it under the compliance supervision scope for some refined oil products, increased its import cost by 1,218 yuan per ton. This change fundamentally altered the logic of feedstock selection for independent refineries.
Independent refineries with quotas can directly import heavy crude oil from South America, such as Merey crude, which is similar in quality to diluted asphalt, without bearing this additional compliance cost, giving them stronger feedstock cost control capabilities. In contrast, refineries without quotas processing diluted asphalt still face significantly higher cost pressures, even if they can later enjoy some cost deductions through compliance procedures. Data from 2025 shows that the theoretical profit for asphalt production by Shandong independent refineries processing diluted asphalt was -423.84 yuan/ton, while the theoretical profit for those processing crude oil was 112.41 yuan/ton. The gap is not only huge, but the former is loss-making while the latter is profitable.
The feedstock difference between independent refineries and state-owned refineries is primarily manifested in the selection preference for crude oil varieties, which in turn affects the product yield structure. Independent refineries primarily import heavy crude oil from South America, which has a high asphalt component content, typically yielding around 50% or even higher asphalt. State-owned refineries mainly use heavy crude oil from the Middle East, such as Saudi Heavy, Oman, and Basra, with asphalt yields maintained below 35%.
The difference in crude oil types not only affects asphalt yield but, more crucially, impacts the yield structure of light oil products. Middle Eastern crude offers significantly higher yields of light oil products compared to South American heavy crude. Given that prices for gasoline, diesel, and naphtha are substantially higher than asphalt, higher light oil yields can effectively offset feedstock cost differences and even generate excess profits. In 2025, the theoretical profit for asphalt production at a state-owned refinery in Jiangsu reached 450.95 yuan/ton, significantly higher than the 112.41 yuan/ton theoretical profit for Shandong independent refineries processing crude oil, with the core reason being the profit contribution from light oil products.
In early 2026, risks on the feedstock side combined with supply-demand dynamics continue the profit divergence pattern. On the cost side, the evolving situation in South America has become a key factor. US control over a certain South American country has interrupted its crude oil shipments to Asia, with no cargoes shipped to Asia after mid-December. Expectations for tightening supply of Merey crude continue to intensify, pushing up feedstock procurement costs for independent refineries and providing strong support for asphalt prices from the cost side. As of January 16, 2026, the national average asphalt price rose to 3,321.86 yuan/ton, an increase of 3.96% compared to the average price before the New Year holiday.
On the supply-demand front, a contraction in supply and divergent demand create a dynamic balance. Total domestic asphalt production in January is estimated at 2.066 million tons, a month-on-month decrease of 9.47%, marginally easing supply pressure. On the demand side, road construction demand in the north has basically ended, supported only by essential waterproofing needs, while rush construction demand in the south remains firm. The improving supply-demand structure supports rising prices but has not yet fully reversed the losses for independent refineries. As of January 14, 2026, refineries with crude oil quotas and state-owned refineries remained profitable, while the profit for refineries without quotas processing diluted asphalt was approximately -300 yuan/ton, indicating the continued profit divergence pattern.
In summary, raw material differences are the core source of the divergence in asphalt production profits, with policies and international situations further amplifying the profit gap, while the yield structure determines profit elasticity. In the latter half of January, the supply-demand structure in the asphalt market has improved somewhat, and concerns over feedstock supply persist. It is expected that the price center for asphalt will maintain a range of 3,300-3,350 yuan/ton. Profits for state-owned refineries and independent refineries with quotas are expected to remain stable, while the losses for refineries without quotas may narrow slightly, but a full profit reversal is unlikely. In the medium to long term, the tightening supply of crude oil from a certain South American country may become a trend, continuously raising the cost base for independent refineries' feedstock. State-owned refineries' advantages in feedstock diversification and product structure are prominent, making it difficult to reverse the profit divergence.
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