This week, the asphalt futures contract surged strongly, with the spot market following suit. The high-end price of heavy-duty asphalt in East China rose to 3,300 yuan/ton, while low-priced resources continued to tighten, and refineries showed strong price support sentiment. Amid the traditional off-season for demand, the core driver of this strong market performance points directly to cost factors, with crude oil prices rising by 6.5% cumulatively this week. According to data monitored by 100ppi.com, the ex-factory price of Jingbo #70 heavy-duty asphalt in Shandong was 3,133 yuan/ton on January 25, and the ex-factory price in Shandong reached 3,233 yuan/ton on January 28, reflecting a slight weekly increase of 4.47%. This price hike is not due to improvements in supply and demand fundamentals but is driven by favorable cost-side factors, with geopolitical conflicts and raw material disruptions being the core factors. The correlation between asphalt and crude oil prices is as high as 0.9, indicating that cost support is fully in play. More importantly, the United States has intensified restrictions on Venezuelan crude oil exports, causing the discount of Merey heavy crude oil (a key raw material for asphalt) to Brent crude to narrow rapidly from -$13/barrel to -$5/barrel. Domestic independent refineries rely on Venezuelan oil for 50%-70% of their supply, and alternative raw materials are priced higher, further strengthening expectations of rising costs and amplifying the price increase. The operating rate of domestic asphalt refineries has dropped to 26.8%, a low level for the same period. Production in January is expected to reach 2 million tons, down 7.3% month-on-month and 12.1% year-on-year. Spot supply is tightening, low-priced resources are disappearing, and the spot market's price focus is shifting upward. The current market exhibits a pattern of "strong costs, weak demand," with the tug-of-war between bulls and bears focusing on the sustainability of costs and the pace of demand recovery. Demand remains in the off-season, with construction halted in the north and only intermittent construction in the south. Downstream purchases are based on immediate needs, and the operating rate for road asphalt is only 14%. Infrastructure investment growth is sluggish, making it difficult for short-term demand to achieve a breakthrough. In the short term, geopolitical tensions and oil prices are the core variables. If conflicts escalate, oil prices will continue to rise, and asphalt will follow suit. If risks ease, there will be downward pressure. Domestic raw material inventories can support operations until the end of February, and the sustainability of costs will be tested after the holiday. In the medium to long term, with the arrival of the spring construction peak season, demand may improve marginally. However, OPEC's production increases and the recovery of refinery operating rates may suppress valuations, potentially leading to a return to a volatile downward trend.