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Daily Market Review on Specified Futures Products 2020.10.28

Fang submitted 2020-10-28 11:12:04

Crude oil

Hurricane Zeta once again affected the U.S. offshore oil production. Currently, approximately 900,000 barrels/day of crude oil production has been shut down due to the impact of the hurricane. However, similar with the impact of the previous hurricane, most of the shutdown of production capacity is due to the evacuation. The loss due to the preventive shutdown will soon recover after the hurricane passes. The impact on oil production in the medium term is limited. However, the number of hurricanes this year is obviously abnormal, and there are more hurricanes will directly affect the US in oil production, refinery operations and port trade

Strategy: Neutral and bearish relatively, reverse cash and carry arbitrage strategy on Brent, long the sixth lines and short the first line

Risk: supply disruption caused by geopolitical events and sustained sharp depreciation of the US dollar

Iron Ore

On October 27th, 2020, the position on I2101 contract increased by 4517 and closed at ¥765.5 per ton, the position on I2105 contract increased by 12 and closed at ¥709.0 per ton.

Important Information

1. Xinhua News: It was learned from China Baowu Iron and Steel Group on October 27th that the joint venture project (Baoruiji) between China Baowu and Rio Tinto has completed 200 million tons of iron ore shipments. It is understood that the project Baoruiji was established in 2002, and Rio Tinto and China Baowu respectively own 54% and 46% of the shares of the joint venture. Since the completion of the Dongpo mine in 2004, the iron ore output from Baoruiji joint venture has been supplied to China Baowu. Since 2019, China Baowu has become Rio Tinto's largest customer in the world.

2. Data from the Bureau of Statistics, it shows that from January to September, the ferrous metal smelting and processing industry achieved operating income of 5153.0 billion yuan, a year-on-year increase of 1.2%; operating costs were 477.83 billion yuan, a year-on-year increase of 1.9%; the realized total profits is 157.74 billion yuan, a year-on-year decrease of 18.7 %, the decline narrowed by 4.4 percentage points from January to August.

3. In terms of spot, the PB powder in Rizhao Port was ¥845 per ton, golden bubba powder price was equivalent to ¥891 per ton,

Trading Strategy

1. In terms of supply, some iron ore shipping berths in Australia and Brazil are under the maintenance. It will affect about 1.5 million tons of shipping volume in Australia, while the Brazilian shipping impact is relatively small. The number of shipments were generally stable and increased. The shipment number in Australia performed strongly, the shipments in Brazil are subject to large fluctuations, but the market expects its shipments to rebound. In terms of demand, the volume of dredging ports has decreased, the average daily iron ore output has fallen from the high level, and the daily consumption of imported iron ore has decreased. The demand has been suppressed under the pressure of limited production during the heating season, and the downstream steel mill industries are not willing to restock, with the seasonal decline of steel mill production, high inventories restrict the space for rising prices of finished materials, the prices of iron ore lack strong upward momentum, and there is still a greater pressure to reduce prices in later stages, but the range of discount is relatively large. It is expected to be weak and volatile. It is suggested to long 01 coking coal and short on 01 iron ore

2. Option strategy: It is advised to hold the short position on i2101-C-870. (For reference only)


Basis remains weak, sales and production of polyester continue to slow down.

In October, we will continue to estimate the de-stocking, follow up by the implementation of the overhaul and the continuity of demand improvement. There is an expectation of rigid accumulation in November and December.

In terms of the unilateral strategy, it is advised to be neutral; for the strategy across varieties, the current TA pattern is long in short-term and short in long-term, in late October, there is a chance to continue the rebound; in addition, the accumulated warehouse concerns from November to December followed by the peak of seasonal terminal loaded, and the rebound gives space for varieties allocation; for strategy across period, it is advised to focus on the reverse cash and carry strategy opportunity after the next round of TA overhauls fulfilling and rebound of 1-5 spread. It is advised to focus on PTA factory inspection and fulfillment wishes, and the downstream restocking space and improvement of demand.

Natural Rubber

RU: October 27th, 2020, the most actively traded contract of RU01 up by 510 or 3.24% and closed at 16,235. The most actively traded contract of JRU03 up by 5.6 or 2.24% closed at 256.0. Yunnan WF closed at 14,250 to 14,800 yuan per ton. Hainan SCRWF closed at 14,800 to 14,900 yuan per ton, the secondary standard rubber closed at 12,600 to 12,700 yuan per ton, and Thailand’s RSS3 closed at 19,050 to 19,200 yuan per ton.

NR: The most actively traded contract of NR12 up by 295 or 2.52% and closed at 12,020. The most actively traded contract of TF01 up by 2.1 or 1.23% closed at 172.2. the price of Qingdao rubber in USD increased by $10 to $20 per ton. The spot or CIF of STR20 was $1,780 to $1,790 per ton. The CIF of SIR20 in November was $1720 to $1740 per ton. The CIF of mixed rubber from Thailand in Feb was $1,725 per ton to $1,730 per ton.

Triangle Tire quarterly report: the company achieved operating income of 6.211 billion yuan in the first three quarters, a year-on-year increase of 5.22%; net profit attributable to shareholders was 817 million yuan, a year-on-year increase of 32.27%; the net profit excluded the non-recurring properties attributable to shareholders was 689 million yuan, a year-on-year increase of 35.72%; basic earnings per share were 1.02 yuan.

Futures Operation Advice: In terms of synthetic rubber, the overhaul of styrene-butadiene equipment has tightened the supply side. Driven by the strengthening price of natural rubber, market prices tend to rise but difficult to fall. Downstream tires industries maintain a high operating rate, and most steel brands have increased by about 3%. As of September, the output of domestic truck was 384,000 tons and sedan output was 925,000 units. The cumulative year-on-year growth rate of both declined for the second consecutive month. For the most actively traded contract of RU01, it is suggested to long a slight position and set a stop loss at 15820 points. (For reference only)

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