Crude oil

Crude oil: API crude oil inventories increase

Since the outbreak of Covid-19 this year, nearly 1.5 million barrels per day of oil refining capacity has been shut down or renewable energy production facilities and import terminals have been shut down globally. These refineries are mainly located in the United States, Europe, Southeast Asia and other regions. China also has several refineries were shut down due to the capacity replacement of the Yulong project in Shandong. The general background of the shutdown of these refineries is that Covid-19 has affected the consumption of refined oil and caused the global refining profit to be sluggish. Since most refineries have been suspended, the impact on the crude oi demand is limited, but Covid-19 has accelerated the process of elimination and replacement of global refinery capacity. Next year, large-scale refining and chemical projects in China and the Middle East will continue to be put into production. It is expected that more refineries with old equipment will be eliminated quickly, the global oil refining industry structure will have in-depth adjustments.

Strategy: Neutral, it is advised to hold the current position,

Risk: No

Iron Ore

On November 17, 2020, the position on I2101 contract decreased by 5564 and closed at ¥858.5 per ton, the position on I2105 contract increased by 3901 and closed at ¥782.0 per ton, the spread of Iron 1-5 contract is 78.5. In terms of spot, the PB powder in Rizhao Port was ¥865 per ton, BRBF price warehouse receipt equivalent to ¥913 per ton, the price of Karara at Lianyun port was ¥905 per ton, the best delivery Karara was equivalent to ¥890 per ton.

【Important Information】

1.According to the media reports, Decmil Group stated that it has signed a 30 million Australian dollars (22 million US dollars) contract with Rio Tinto to design and build a loading truck transportation facility for Mesa J iron ore mine in Pilbara, Western Australia. The contract is expected to be completed by the end of 2021.

【Trading Strategy】

1.Mysteel Australia and Brazil shipping data shows: Last week shipment volume have recovered, but the average volume in November was significantly lower than October. Later, Australia and Brazil have port maintenance plans, which are expected to affect the total shipment volume of about 1.5 million tons. On the demand side, some low-cost steel mills have a profit of 700 yuan/ton, with an average of 500 yuan/ton. The demand remains high. The output of molten iron is expected to increase. Steel mills will also have replenishment demand. Port stocks have declined. There is still space for growth.

2. Option strategy: It is advised to hold the short position on i2101-C-880 and hold the short position on i2101-P-800. (For reference only)

PTA

Price promotion on the sales of Polyester, production and sales go up

We will continue to estimate the de-stocking, follow up by the implementation of the overhaul and the continuity of demand improvement. A small de-stocking can be achieved in November while there is an expectation of rigid accumulation 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

Rubber: Inventory continues to fall, there is support on the price

On November 17, the most active traded RU contract closed at 14,365 (-290) yuan/ton, the price of mixed rubber was 11,675 (-250) yuan/ton, the basis of most active traded contract was -590 yuan/ton (+90); the open interest of top 20 active traded long positions was 79,004 (-2258) lots, the open interest of top 20 active traded short position 101,712 (+1288) lots, and the net short position was 22,708 (+3546).

On November 17, the most active traded NR contract closed at 10,445 (-235) yuan/ton, the STR in Qingdao Free Trade Zone was 1,615 (-20) US dollars/ton, the SMR was 1,625 (-10) US dollars/ton, and the SIR was 1,585 (0) US dollars/ton. The basis of most active traded contract was -21 (+190) yuan/ton.

As of November 13: the total inventory of the exchange was 260,806 (+7296) lots, and the warehouse receipts of exchange were 228,090 (+3090) lots. Raw materials: sheet rubber 62.49 (+0.1), cup lump 39.3 (0), latex 53.5 (0), RSS3 64.79 (-2.07).

As of October 29, the domestic all-steel tire operating rate was 75.26% (-0.13%), and the domestic semi-steel tire operating rate was 71.03% (-0.2%).

Viewpoint: Domestic raw materials maintain a strong pattern, while overseas raw materials prices have loosened due to the peak rubber tapping season. At present, due to limited output increase, the raw material cost support under Shanghai latex is relatively strong, while the domestic tire demand for NR is normal, and overseas demand has recovered. There is still support on the demand side, and the space is expected to be limited. At the same time, we have seen the continued decline in out-of-zone inventories, mainly due to the reduction in inbound and the increase in outbound, this strongly supports the dark latex. However, overseas production is gradually released, overseas demand is still weak, and the short-term upward drive is weak. It is recommended to focus on short-term operations.

Strategy: Neutral

Risk: Production and inventory accumulated substantially, and demand dropped significantly.