According to WPB, China’s domestic bitumen market has begun to ease from the extreme price levels reached after the September and early-October rally, with the national average falling to CNY 6,334 per metric ton on October 14 despite commercial inventories remaining almost 70% below year-earlier levels. The combination shows that exceptionally low stocks are no longer sufficient on their own to keep prices rising when downstream demand weakens and sellers compete more aggressively for physical orders.
The national average declined by approximately 1.2% week on week and by CNY 29 per metric ton from October 13, when the benchmark stood at CNY 6,363. The latest decline remains modest compared with the scale of the preceding rally. Even after the correction, the average price was still approximately 105.8% higher than a month earlier and 79.1% above the corresponding level last year.
This makes the current movement a high-level correction rather than a reversal of the broader 2026 price shock. Prices remain historically elevated, but the market is beginning to show that buyers have become less willing to chase material at the highest levels reached after the National Day holiday.
Regional markets also show that the decline is not uniform. Shandong transactions fell to around CNY 6,200 per metric ton on October 14, down CNY 50 on the day, as downstream purchasing remained insufficient and traders lowered offers to stimulate sales. Hebei eased to approximately CNY 6,320, while Chongqing moved to around CNY 6,660.
Other markets remained firmer. Jiangsu held around CNY 6,500 per metric ton, while Zhejiang remained near CNY 6,600. In Zhejiang, intermittent refinery production and continuing demand for road construction and modified bitumen helped support transactions, while commercial inventories continued to be consumed.
The most important counterpoint to the weaker price trend is the inventory structure. China’s commercial bitumen inventories stood at approximately 438,000 metric tons on October 12, down by 22,000 tons from October 8 and representing a 4.8% decline over only four days.
Compared with the same period last year, commercial inventories were down 69.9%. That figure shows that the market remains extremely lean by historical standards even as prices have begun to soften.
Commercial inventories should be distinguished from stocks held at refineries. Refinery bitumen inventories stood at approximately 418,000 metric tons on October 12, only 2,000 tons below October 8, representing a decline of around 0.5%.
Refinery stocks were nevertheless 47% lower than a year earlier. Both major inventory categories are therefore still substantially below 2025 levels, but they describe different parts of the supply chain and should not be combined into a single stock figure.
Commercial inventories represent material already held within the distribution and trading system, while refinery stocks reflect product remaining at producing plants. A decline in commercial inventories can therefore occur at the same time that refinery availability remains relatively stable.
The latest data show precisely that pattern. Road projects continue to create some underlying consumption, particularly in eastern regions, and buyers have been drawing down existing commercial stocks rather than building new inventories aggressively.
Eastern China recorded the largest reduction in commercial inventories, with stocks falling approximately 11%. Continuing construction requirements supported withdrawals, while market participants prioritised the use of existing commercial material.
The decline in inventories therefore does not automatically signal stronger price momentum. Inventory direction must be considered alongside the rate at which refiners are producing, the willingness of traders to replenish stocks and the strength of final demand from road contractors.
The October 14 market illustrates this distinction clearly. Stocks remain low, but some downstream buyers are limiting purchases to immediate requirements because prices remain exceptionally high. Traders facing slower turnover have responded by competing more aggressively for sales and lowering offers in selected regions.
This behaviour helps explain why prices can fall while inventories also fall. In a genuinely accelerating shortage, declining inventories would normally be accompanied by stronger bidding for available material. The current Chinese market instead shows buyers consuming stocks cautiously while resisting further price increases.
The supply-demand relationship has consequently shifted from an obvious deficit toward a more dynamic balance. The market is still tight compared with historical norms, but the immediate shortage signal has weakened as physical buyers become more price-sensitive.
This distinction is especially important after the October 8 market surge. When trading resumed after the National Day holiday, bitumen futures rose sharply alongside China’s broader energy complex, while refinery inventories had increased during the holiday because normal dispatch activity slowed.
By October 12, that temporary refinery-stock build had begun to reverse slightly, while commercial inventories continued to fall. The physical market therefore appears to be absorbing material again, but not at any price.
The difference between futures and physical transactions also remains important. The strong post-holiday move in exchange-traded bitumen reflected broader energy repricing and geopolitical risk, whereas the October 14 national physical average reflects actual domestic transaction conditions across producing and consuming regions.
The current CNY 6,334 figure should therefore not be compared directly with China CFR imported bitumen assessments. Domestic Chinese pricing is denominated in yuan and incorporates local refinery supply, taxation, inland transportation, regional demand and domestic trading conditions.
CFR import prices represent a different commercial basis that includes the cost of bringing foreign material to China by sea. A direct numerical comparison without adjusting for exchange rates, taxes, freight, quality and delivery basis could produce a misleading conclusion about the competitiveness of imported material.
The same caution applies when comparing different Chinese regions. Shandong, Jiangsu and Zhejiang can move differently because refinery operations, contractor demand, weather, logistics and regional stock positions vary substantially.
Shandong currently provides the clearest evidence of price pressure. Refinery production has remained relatively stable, another refinery is expected to resume operations, and downstream purchasing has not kept pace with available offers. Traders have consequently reduced quotations to encourage transactions.
Jiangsu shows a more balanced market. Supply has been supported by stable refinery production, but most purchasing remains focused on immediate requirements and transaction activity has been moderate. Market participants have consequently become more cautious about the near-term price outlook.
Zhejiang remains comparatively supported. Intermittent refinery production has limited inventory pressure, while end-user demand and stronger modified-bitumen shipments have continued to consume commercial stocks.
The divergence between regions reinforces the argument that China is not moving into a uniform nationwide shortage or surplus. The market is transitioning from an extreme price rally into a more differentiated physical phase in which regional demand increasingly determines pricing.
The very low year-on-year stock figures remain strategically important. Commercial inventories almost 70% below last year leave the market with a thinner buffer if refinery disruptions, stronger road demand or another external energy shock appears.
Refinery stocks 47% below last year provide a similar warning. The recent price decline should therefore not be interpreted as evidence that China has rebuilt abundant bitumen supply.
Instead, the market appears to be moving from acute scarcity toward a fragile equilibrium. Current demand is not strong enough to force prices higher, but inventories remain too low to provide a large cushion if consumption accelerates.
Weather will become an increasingly important variable through the second half of October. Rainfall has already limited road-construction demand in some areas, while colder conditions will gradually reduce paving activity in northern regions.
If seasonal demand weakens faster than refinery supply, prices could continue easing even while year-on-year inventories remain low. Sellers would then be competing for a smaller pool of immediate physical demand.
If construction demand improves, however, the low inventory base could again become price-supportive. Because commercial stocks are already far below normal historical levels, a stronger draw could quickly tighten available supply.
The October market therefore contains two apparently contradictory signals that are in fact compatible. China has very low bitumen inventories relative to last year, but marginal demand has weakened enough to create downward pressure on prices.
For traders, the key question is no longer simply whether inventories are low. The more important question is whether downstream buyers are willing to replenish at current price levels.
The next indicators should include the pace of commercial-stock depletion, refinery restarts, daily transaction volumes, road-construction demand and whether the national average can remain above CNY 6,300 per metric ton as October progresses.
A renewed increase in demand accompanied by continued inventory depletion would strengthen the market again. Continued weak buying alongside stable refinery supply would instead allow the current correction to extend despite the low year-on-year stock base.
The October 14 data therefore offer a more nuanced picture than either a simple shortage or a simple price decline. China’s bitumen market remains historically tight, but the immediate physical balance has improved enough for sellers to compete and prices to move lower.
For the broader Asian bitumen market, this distinction will matter. China remains one of the region’s largest consumers, and a sustained cooling of domestic buying could reduce pressure on imported cargoes. A renewed tightening, however, could quickly restore demand for external supply.
The current signal is therefore one of moderation rather than normalization. Prices have begun to retreat from exceptionally high levels, but commercial and refinery inventories remain far below last year, leaving the market vulnerable to any new disruption in supply or recovery in road demand.
By WPB
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