Asphalt Prices Show Negligible Change Amid Declining Oil Prices

Despite the depressed level of oil prices and the historical relationships between oil and asphalt price changes, asphalt prices reached a record high in December. Indeed, since June of 2014 oil prices declined 52 percent, but during the same time asphalt prices decreased just 0.4 percent with only a slight regress since the end of 2014.

The cement and concrete industry was concerned that as oil prices decay, concrete’s relative price position against asphalt would erode. Asphalt paved roads should have regained a competitive advantage over concrete pavement on both an initial bid and life-cycle cost basis. This  may be explained by the impact of the increased introduction of cokers at oil refineries, which reduce or eliminate bitumen or liquid asphalt production. This could result in substantive reductions in asphalt supply at a time when cycle demand is increasing. In such an environment, the market dynamics could mask the lower input cost typically associated with low oil prices.

Source: The Portland Cement Association's Executive Report e-newsletter for April 27.