Asphalt Prices Explained

Asphalt prices are lower due to on-demand purchases with limited downstream procurement intensity as investors are cautious of spot transactions.

On the supply side, the easing of international crude oil prices, the gradual increase in supply from several refineries, and resuming asphalt production influenced the downward pressure of its prices.

For instance, the resumed production of Dongming Petrochemical resulted in a modest increase in the supply of Asian asphalt, intensifying competition in an already oversupplied market.

Why are asphalt prices fluctuating?

1. Paving Application

Asphalt additives or modifiers improve the aesthetic appeal and durability. So, a combination of asphalt and concrete provides durable roads, airport runways, taxiways, and bike lanes. They enhance asphalt performance pavements by making them more resistant to thermal cracking, rutting, and stripping.

These properties elevated asphalt’s marketability in the construction industry. As a result, the demand for this commodity rapidly rises due to government-funded projects. For instance, China doubled its investment in road development and maintenance to streamline connectivity among cities.

2. Construction industry

The biggest consumer of asphalt is the road construction industry and experts predicted that this will continue as most countries reported favorable economic conditions. Also, the aging railways and bridges and the advancement in non-building construction activities will largely contribute to its market trend.

Additionally, improved technological advancements in mixing plants, coupled with innovative solutions from manufacturers will keep up with the consumer demand.

3. Waterproofing Application

The changing weather conditions call for improved home applications. This prompted consumers to adopt technologies that protect their home structures from extreme weather conditions. This translated to the growth of waterproofing approaches.

Waterproofing of infrastructures prevents mildew, mold, decay, and leaks while safeguarding the construction of the structure. 

Housing systems for single and family residences boost asphalt prices as more developers opt for this commodity because of its availability and easy installation. Additionally, residential re-roofing fuels the demand for asphalt as homeowners will replace older roofs with newer ones.

4. Asphalt Recycling

The increasing environmental concerns and the need for sustainable construction practices influence the marketability of asphalt recycling.

SteelPhalt (a division of Harsco Environmental) pioneered this field by using recycled materials such as steel slag to produce high-performance asphalt. 

This innovation reduces the need for quarried aggregate and provides a sustainable waste solution for steelmakers. Similarly, Aggregate Industries in the UK is making strides towards creating 100% recycled asphalt solutions.

5. Cold Mix Asphalt

The affordability of cold mix asphalt creates significant market opportunities within the asphalt segmented market. Cold mix asphalt (produced and applied at lower temperatures than hot mix asphalt) reduces energy consumption and costs, making it an attractive option for small-scale and large-scale projects. 

This cost-effectiveness drives adoption in regions with limited resources and infrastructure, such as rural areas and developing countries.

Which variables impact the price of asphalt?

• Paving Application
• Construction Industry
• Waterproofing Application
• Asphalt Recycling
• Cold Mix Asphalt
• Raw Material Price Fluctuation

Where does asphalt come from?

Asphalt comes from petroleum, a natural resource extracted from oil wells. The production process begins with distilling crude oil in refineries, where the heaviest fraction (known as asphalt cement) is separated.

Then, it is mixed with aggregates like sand, gravel, and crushed stone to create the final asphalt mixture. The mixture is heated to around 200-350°F (93-177°C) to ensure proper binding and fluidity and it is transported to paving sites where it is laid and compacted.

The United States, China, India, Russia, and Canada are the top asphalt-producing countries. These countries have advanced refining technologies and significant crude oil reserves, enabling them to meet domestic and international demand.

For example, the United States is one of the largest producers, with companies like Marathon Petroleum and Phillips 66 leading the industry. Similarly, China’s ambitious infrastructure projects fueled its asphalt production, making it a key player in the global market.

What are the uses of asphalt?

Here are the top 5 applications of asphalt and their uses:

1. Road Construction – Asphalt is the most common material for paving roads, highways, and streets due to its durability, flexibility, and weather resistance. It provides a smooth and safe driving surface, reducing the risk of accidents and vehicle damage.

2. Airport Runways and Taxiways – It is used in airport construction for runways and taxiways because of its ability to withstand heavy loads and high traffic. It ensures a stable and reliable surface for aircraft operations.

3. Parking Lots and Driveways – It is widely used for parking lots and driveways due to its cost-effectiveness and ease of maintenance. It provides a strong and long-lasting surface that can handle the weight of vehicles and resist wear and tear.

4. Recreational Facilities – Playgrounds, bicycle paths, running tracks, and tennis courts use asphalt because its smooth surface is ideal for sports and recreational activities, providing a safe and enjoyable environment.

5. Industrial and Agricultural Applications – Asphalt is used in industrial settings for paving ports, landfill caps, and work sites. In agriculture, it is used for barn and greenhouse floors, offering a durable and easy-to-clean surface.

What is the future price of asphalt?

Significant government investments in infrastructure projects drive the demand for asphalt, particularly in developing and developed countries. 

For instance, China’s Belt and Road Initiative (along with similar efforts in India and Indonesia) is expected to boost the demand for paving asphalt. These projects require vast quantities of asphalt for road construction and maintenance. Government funding for infrastructure projects in 

China has been the number one key player in the global asphalt market.

Cold mix asphalt utilization is growing due to its advantages over traditional hot mix asphalt, such as lower production temperatures, reduced energy consumption, and the ability to be used in colder climates. This led to its increased adoption in various regions, contributing to the overall growth of the commodity. 

On the restraint side, asphalt recycling poses a price destabilizer for new asphalt. Recycling involves reusing old asphalt materials, reducing the need for new production. This practice is becoming more common as it is cost-effective and environmentally friendly, impacting the demand for new asphalt in the market.