Crude oil

Asia-Pacific buying interest returns, and the crude oil spot market is showing signs of recovery.

With the return of buying interest in the Asia-Pacific region, the crude oil spot market has shown the obvious signs of recovery recently due to the following reasons.1. The discounts of some types of oil rebounded, such as Basra Light, Russian ESPO, etc. The monthly basis between Dubai/Oman continued to increase in October, and the recent month has now switched to a back structure. 2. The global crude oil inventories continue to decline, especially the floating warehouse inventories continue to accelerate the depletion, and this is still in the context of Libya's faster-than-expected increase in production and the second closure of European due to Covid-19. 3. The sales of spot crude oil is better than expected. For example, the cargo of Angola crude oil in January has been booked within two weeks, it is much faster than the previous sales progress. The above signals indicate that the Asia-Pacific buying interest, which is dominated by China, is returning. From a country perspective, China’s procurement momentum comes from the local refining quota in the new year of 2021 and the second phase of Rongsheng production. Although the current domestic crude oil inventory level is still high. The satellite inventory shows that China’s crude oil storage capacity utilization rate is still around 70%, but the floating warehouses that have been stranded in ports have been basically cleared. In addition, the current refined oil storage capacity utilization rate has been reduced to 60%, which can support refineries to maintain at a high level. The increase in Indian purchases comes from the strong recovery of domestic demand for refined oil and refinery operations after the first wave of Covid-19. Judging from Indian refined oil consumption data in October, it has resumed positive year-on-year growth, and diesel consumption has performed particularly well. The increase in Japanese purchases is mainly due to the consumption of kerosene for heating in winter. Due to the recent cold weather, the reduction of Japanese kerosene produced by the superimposed refinery is relatively tight.

However, it should be noted that the current global demand pattern is still strong in the east and weak in the west. The consumption of refined oil products in the United States and Europe is not optimistic. From the perspective of Covid-19, the alternative data shows that the travel liquidity index in Europe has fallen from 80% to about 60%. , There have been signs of stabilization, and the impact of Covid-19 has gradually reach the highest level. However, the number of single-day infections in the United States is still reaching a new high record. It does not rule out the possibility of a partial lockdown in the United States.

In addition, we also need to pay attention to OPEC’s next policy adjustments. The current market demand for crude oil in the Middle East is relatively strong, and countries such as Iraq and the United Arab Emirates tend to increase the production. Therefore, the return of the Asia-Pacific buying interest also increased the uncertainty of OPEC meeting. If OPEC does not delay production increases, it will have a negative impact on the short-term crude oil market.

Neutral, it is advised to hold the current position,

Risk: No

Iron Ore

On November 20, 2020, the position on I2101 contract decreased by 9740 and closed at ¥891.0 per ton, the position on I2105 contract increased by 605 and closed at ¥804.5 per ton, the spread of Iron 1-5 contract is 86.5. In terms of spot, the PB powder in Rizhao Port was ¥890 per ton, BRBF price in Rizhao Port was ¥895 per ton, BRBF price warehouse receipt equivalent to ¥934 per ton, the price of Karara at Lianyun port was ¥918 per ton, the best delivery Karara was equivalent to ¥900 per ton.

【Important Information】

1. Mysteel: According to media reports, United Steel Minister Dharmendra Pradhan said at the MCCI annual meeting that there is the possibility of prohibiting iron ore exports in Indian market for a short period of time. At the conference, the representatives of the iron and steel industry would like the intervention of Indian Iron and Steel Ministry to solve the problem of ore shortage.

2. Fubao Information: According to a report released by Peruvian Ministry of Mines and Energy, Peru's iron ore output in September increased by 35.9% year-on-year to 1.02 million tons. On a monthly basis, iron ore output in September increased by 2.3% from 1 million tons in August. The cumulative iron ore output in Peru from January to September reached 5.63 million tons, down by 19% from the same period last year.

【Trading Strategy】

Last week, the imported iron one in 45 ports decreased, down by about 263,000 tons year-on-year. In terms of volume, both Australian and Brazilian mines increased slightly. In terms of varieties, six ports in the north have accumulated quality of high and low-grade fines, medium-grade fines, and six ports have slightly increased MNPJ. The stocks of imported iron ore from steel mills increased by 190.91 to 112 million tons, and the replenishment efforts were strengthened. The daily consumption of imported iron ore by steel mills decreased slightly, and the consumption of storage was relatively low. At present, downstream building materials continue to be destocked. Although the destocking rate has slowed down, the long term process profit in the steel plant is relatively high. It is expected that there will e an increase in the replenishment and production. The iron ore is easy to rise but difficult to fall. (for reference only)

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

PTA

PTA: The terminal load dropped slightly, PTA maintenance process is still slow

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: The demand for short-term slows down, rubber prices are restricted.

The rubber price decreased slightly last week, mainly due to the decrease in the demand side, the impact of environmental inspections in the north of China, the slowdown of tire exports, and the operating rate of some tire factories dropped slightly. The total inventory in the domestic exchanges as of November 20 was 142,232 tons (-118574), and the amount of futures warehouse receipts was 73,820 tons (-154270). With the delisting of RU1911 last week, the old rubber warehouse receipts were brought the decrease in the receipts and inventory.

According to Longzhong's statistics, as of November 15, stocks in the bonded zone have rebounded slightly, stocks outside the zone have continued to fall slightly, and total stocks have continued to fall. Last week, the spot market prices first fell and then rose, the overall price has not changed much. According to Zhuochuang’s understanding, the current release of new rubber production in domestic and the abroad is stable, and the overall operating rate is still maintaining a positive trend. However, Yunnan production area is currently meeting a cut-off, and the latex content is generally low. In the end, due to the price of SCRWF is high, currently tire factories mostly choose other types of rubber to substitute for the use, and the overall transaction in the market is weak. Qingdao Free Trade Zone, the range of latex in U.S. dollar quotation is narrowed, and the selling power is higher than the buying power, the overall transaction volume is limited, and the downstream mostly maintains on-demand procurement under normal inventory. The overall price of the external market has risen, and the supply of raw materials in the production areas is stable. However, under the support of the government, the purchase prices of raw materials in the production areas have risen steadily. The US dollar market has maintained an overall upward movement under the dual support of futures and raw materials. At present, it is heard that the orders for international logistics and transportation have resumed, but the capacity has dropped significantly. Due to the poor return of containers from all over the world, the current shortage of containers in Chinese market has caused a substantial increase in container freight rates. It is rumored that some parts in Thailand have delayed shipping schedules due to rising freight rates and container shortages. As of last weekend, the premium of the synthetic rubber was 2100 yuan/ton (+75), but styrene rebounded slightly, and the price difference continued to narrow last week. In terms of downstream tire operating rate, as of November 20, the operating rate of all-steel tire companies was 73.52% (-1.74%), and the semi-steel tire companies was 70.58% (-0.45%). Environmental inspections in the north and the slowdown in exports brought about a drop in operating rates last week.

Viewpoint: At present, China is meeting a stoppage of production and the output of raw materials is limited. From the perspective of price performance, it is relatively strong. This factor still supports the price of RU in Shanghai Future Exchange. While the main overseas production areas are in the peak season for rubber tapping, the loosening of raw material prices also reflects the steady increase in production. The slowdown in the domestic arrivals inventory due to the shortage of container, on the one hand, on the one hand, it is not conducive to overseas raw material prices, and on the other hand, it will put pressure and slow down the domestic supply in the short term. The supply support for NR20 will still exist, but as time flies, the overseas supply pressure will still be transmitted to the domestic. The demand side generally maintains a positive pattern, but in the short term, due to the impact of domestic environmental protection and the slowdown of overseas exports, the demand is weak. It is expected that rubber prices will fluctuate in the short term.

Strategy: Neutral

Risk: Production and inventory accumulated substantially Covid-19 and other impacts on the demand side, the balance of fund is tight