Crude oil

EIA commercial crude oil inventories fall.

The OPEC production restriction meeting at the end of the month is the focus of the recent market. For the Asia-Pacific refineries, the current replenishment behavior is also partly due to the anticipated future OPEC delays in increasing production and the tight supply, similar to the replenishment that US sanctions against Iran in September 2018. From the perspective of the production restriction alliance, the current market demand for medium and heavy crude oil is good. If the increase in production is delayed, it will mean giving up part of the market share, but the price will be compensated, and if the increase in production on schedule, it means there is a protection on the market. We believe that the recent market changes have once again created a problem for the limited production alliance, and the uncertainty of the outcome of the meeting at the end of the month has increased.

Strategy: Be caution.

Risk: OPEC increases production as scheduled, and Covid-19 leads to a second lockdown

in U.S.

Iron Ore

On November 25, 2020, the position on I2101 contract increased by 8154 and closed at ¥881.5 per ton, the position on I2105 contract increased by 146,000 and closed at ¥811.0 per ton, the spread of Iron 1-5 contract is 70.5. the spread of Iron 5-9 contract is 53.5. In terms of spot, the PB powder in Rizhao Port was ¥882 per ton, no transaction on BRBF in Rizhao Port, previous BRBF price warehouse receipt equivalent to ¥934 per ton, no transaction on Karara at Lianyun port, while the last warehouse receipt was ¥900 per ton.

【Important Information】

1. Mysteel: According to media reports, from January to October 2020, the output of Ukrainian Metinvest Group, Northern GOK pellets was 4.46 million tons, down by 36% year-on-year; the output of concentrate iron was 10.5 million tons, up by 3% year-on-year.

2. Mysteel: China Iron and Steel Association: In the first 10 months of this year, China’s crude steel output was 874 million tons, an increase of 5.5% year-on-year; the output of pig iron was 742 million tons, an increase of 4.3% year-on-year. Steel production maintained a positive growth every month except for a negative growth of 1.7% in March.

【Trading Strategy】

Except for low-grade fine ore stocks, all other varieties in North Six Ports have declined this week. Among them, medium-grade fine ore stocks have fallen the most, with a decline of 780,000 tons. MNPJ in six ports also dropped by 600,000 tons. On the supply side, the shipment volume from Australia and Brazil all declined. Except Rio Tinto, the shipments of the four major mines all increased slightly. On the demand side, steel mills are currently profitable, and it is difficult for the output of molten iron to drop significantly. At the same time, the upward price range is limited by warehouse receipts, with JMBF discounted warehouse receipts at 900 yuan/ton, and BRBF discounted warehouse receipts at 934 yuan/ton. If the demand drops or the price of finished products drops significantly, it may affect the willingness of steel mills industry to purchase. However, there is not much space for the drop in molten iron at present. In the future, we need to pay attention to whether there is pressure on the supply side. If not, it is possible to repair the discount upwards on the iron ore.

(for reference only)

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

PTA

PTA: TA increase due to the cost, and downstream polyester production and sales increase for the first time.

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 hold the current position. For the risk, it is advised to focus on PTA factory inspection and fulfillment wishes, and the downstream restocking space and improvement of demand.

Natural Rubber

Rubber: Prices of raw materials rise, latex prices maintain at a strong trend.

On November 25, the most active traded RU contract closed at 14,735 (+60) yuan/ton, the price of mixed rubber was 11,850 (0) yuan/ton, the basis of most active traded contract was -635 yuan/ton (+265); the open interest of top 20 active traded long positions was 56,051 (-6672) lots, the open interest of top 20 active traded short position 75,300 (-722) lots, and the net short position was 19,249 (-750).

On November 25, the most active traded NR contract closed at 10,700 (+10) yuan/ton, the STR in Qingdao Free Trade Zone was 1,625 (0) US dollars/ton, the SMR was 1,605 (0) US dollars/ton, and the SIR was 1,555 (0) US dollars/ton. The basis of most active traded contract was -476 (-20) yuan/ton.

As of November 20: the total inventory of the exchange was 142,232 (-118574) lots, and the warehouse receipts of exchange were 73,820 (-154270) lots. Raw materials: sheet rubber 60.09 (0), cup lump 39.25 (+0.1), latex 53.5 (+030.), RSS3 65.09 (+0.89).

As of November 19, the domestic all-steel tire operating rate was 73.52% (-1.74%), and the domestic semi-steel tire operating rate was 70.58% (-0.45%).

Viewpoint: The price of rubber continued to rebound yesterday. At present, with the stabilization of raw material prices, futures prices have stabilized and rebounded. It is expected that rubber prices are expected to maintain a rebound pattern in the active market. With the cancellation of the old receipts last week, the pressure on latex contract in Shanghai Futures Exchange has been significantly reduced. The recent rainfalls in Thailand have brought the price of raw materials in Thailand's main production areas to continue to rebound slightly. However, due to the domestic production stoppage, the increase in output was limited, and the price of raw materials was relatively strong, which brought strong cost support under Shanghai latex. In the short-term, due to domestic stoppages and decreased volumes of overseas arrivals, supply-side support has appeared, while the demand-side has shown weakness in the short-term, but the positive pattern remains unchanged. It is suggested to hold the long positions in the market.

Strategy: Be caution

Risk: Production has increased significantly, inventory continues to accumulate, and demand has decreased significantly.

Copper

LME copper fluctuated and closed at US$7,326/ton, up by US$17/ton, an increase of 0.23%, and decrease from 774 lots to 309,000 lots

【Important Information】

1.[Jinping Xi calls to congratulate Biden on his election as President of the United States] On November 25, President Xi Jinping sent a call to Joseph Biden to congratulate him on his election as President of the United States. On the same day, Vice President Wang Qishan called Kamala Harris to congratulate her on her election as Vice President of the United States.

2. At 3 a.m. Beijing time on Thursday, the Federal Reserve announced the content of its monetary policy meeting on November 4-5. At the meeting, Fed officials discussed the asset purchase plan in detail, which can be adjusted "quickly" to provide more support to the economy. The Fed also expressed concerns about the pace of economic recovery. After the announcement of the meeting, US stocks changed little. Currently, the Federal Reserve buys US$120 billion of US Treasury bonds and mortgage-backed securities every month. The Federal Reserve can choose to increase the purchase or extend the term.

【Trading Strategy】

1. The Fed announced the minutes of the meeting overnight, quantitative easing will be continued, and copper prices may remain strong in the short term.

2. Arbitrage: After the spread of CU12-1 is increased to over 120 yuan/ton, hold the long position in the market.

3. Options: Hold the current position. (For reference only)