Crude oil

Shanghai Futures Exchange Energy add Murban Crude Oil as the deliverable oil product

The inventory data released by EIA yesterday, the decline in crude oil inventories was more profitable than the performance of API crude oil inventories. However, it is worth to note that the inventory of refined oil products, including gasoline and diesel, has increased significantly. Recent high-frequency data also show that US gasoline consumption continues to be weak, and the recovery of consumption demand is still suppressed by Covid-19, and the profitability of refineries remains sluggish. In addition, Shanghai Futures Exchange add Murban crude oil as a delivery oil product. As warehouse receipts can only be registered in June next year, the short-term impact is limited. However, in the medium term, Murban is one of the deliverable oil varieties in the future. Adding Murban oil as a delivery product can significantly expand delivery resources. The UAE itself also plans to launch Murban crude oil futures. In the future, the crude oil in Shanghai Futures Exchange will form a tripartite linkage with Oman crude oil futures and Murban crude oil futures in order to strengthen the relationship between crude oil and Middle East crude oil spot and futures market.

Strategy: Neutral.

Risk: No

Iron Ore

On December 2, 2020, the position on I2101 contract decreased by 3,017 and closed at ¥933.5 per ton, the position on I2105 contract increased by 18,300 and closed at ¥863.5 per ton, the spread of Iron 1-5 contract is 70.0. the spread of Iron 5-9 contract is 57.5. In terms of spot, the PB powder in Rizhao Port was ¥907 per ton. BRBF in Rizhao Port was ¥930 per ton, the warehouse discounted receipt was ¥972 per ton, the price of Karrara in Rizhao Port was ¥955 per ton.

【Important News】

1.Mysteel: According to the media reports on December 1, FMG Eliwana mine project is expected to deliver the first batch of ore this week, earlier than the original delivery time. The Eliwana mine and railway project, costing US$1.25 billion, includes a dry processing equipment with an annual output of 30 million tons as well as a 143-kilometer railway line. In addition, the construction of the Iron Bridge magnetite project with an annual output of 22 million tons will reach its peak level next year, and its first batch of iron ore is scheduled to be delivered in the middle of 2022.

2. According to the media reports, NMDC iron ore output in November was 3.32 million tons, an increase of 13% year-on-year; iron ore sales were 3.3 million tons, an increase of 18% year-on-year. From April to November, NMDC iron ore output was 17.98 million tons, a year-on-year decrease of 4.81%; iron ore sales were 18.73 million tons, a year-on-year decrease of 6%.

【Trading Strategy】

This week, the inventory of the low-grade fines in six northern ports continued to accumulate, while high and medium grade of iron fines continued to drop. MNPJ stopped rising and turned down. On the demand side, the daily average dredging of ports slightly decreased; the average daily molten iron output remained high, and the profitability of steel mills was good. The volume of molten iron increased, which was good for the price, but the price increase was limited by the warehouse receipt. Karrara warehouse discounted receipt is 914 yuan/ton, BRBF discounted warehouse receipt is 950 yuan/ton. At present, the demand is falling seasonally, scrap prices continue to rise, steel mills' long-term process profits may be maintained, and molten iron output is expected to remain at a high level. The current discount 01 spot is not large, it is suggested to hold the long position on the 05 iron ore

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

PTA

PTA: Basis continues to narrowed, polyester production and sales are still weak

We expect that there is an expectation of rigid accumulation December.

In terms of the unilateral strategy, it is advised to hold the short position; Basis: there is a risk-free arbitrage opportunity, long spot and short TA01. For the strategy across varieties, it is suggested to hold the current position. For the strategy across the period, reverse arbitrage opportunity is ready. For the risk, under the background of slightly lower processing fees, the crude oil may increase the cost.

Natural Rubber

Raw material prices continue to rise, rubber prices are supported

On December 2, the most active traded RU contract closed at 15,775 (+390) yuan/ton, the price of mixed rubber was 12,325 (-300) yuan/ton, the basis of most active traded contract was -1325 yuan/ton (-490); the open interest of top 20 active traded long positions was 96,412 (+11316) lots, the open interest of top 20 active traded short position 135,635 (+15211) lots, and the net short position was 39,223 (+3985).

On December 2, the most active traded NR contract closed at 11,370 (+240) yuan/ton, the STR in Qingdao Free Trade Zone was 1,705 (+45) US dollars/ton, the SMR was 1,685 (+50) US dollars/ton, and the SIR was 1,635 (+30) US dollars/ton. The basis of most active traded contract was -642 (-93) yuan/ton.

As of November 27: the total inventory of the exchange was 136,906 (-5326) lots, and the warehouse receipts of exchange were 73,820 (+21560) lots. Raw materials: sheet rubber 64.19 (0), cup lump 40.85 (+0.2), latex 56.50 (+0.5), RSS3 70.4 (+1.35).

As of November 26, the domestic all-steel tire operating rate was 75.35% (+1.83%), and the domestic semi-steel tire operating rate was 71.30% (+0.72%).

Viewpoint: The price of rubber continued to rise yesterday. On the one hand, the recent support comes from the macro environment, and on the other hand, it mainly comes from the raw material side. The re-rains in Thailand’s main producing areas last weekend caused short-term supply to be suppressed. The domestic raw material prices are still solid. The overall rubber cost is strong. The latest data released this week showed that the inventory in the domestic Qingdao port continued to decline slightly, mainly due to the continued decline in out-of-zone inventory, the bonded warehouse maintained a slight growth momentum, and the total inventory still showed a high trend of decline. Concerns on the supply side have reignited and support for rubber prices is strong. It is expected that the pattern of strong rubber prices will continue.

Strategy: Be caution

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

Copper

LME copper prices fluctuated and closed at US$7,675/ton, down by US$25/ton, an increase of 0.32%, and increase from 813 lots to 314,000 lots

【Important Information】

1.House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer on Wednesday supported a $908 billion bipartisan package as the basis for a new round of negotiations with Congressional Republicans and the White House. They support the plan drawn up by members of the Senate and House of Representatives and the two parties as the basis for negotiations. This is the first public concession that may break the six-month deadlock and pass a stimulus bill before the end of the year. Previously, they supported a US$2.4 trillion program.

2. According to SMM calculations, the global mine copper production growth rate in 2021 will be about 7.0%, mainly from the increase in the production capacity of the Grasberg underground part, Spence Phase II, Kamoa and other large copper mine projects, and the increase in the production of mines in South America. The main increase in smelting capacity comes from the 400,000 tons of crude copper smelting project of Daye Nonferrous Metals. Considering the recovery of some interference from overseas refineries, it is expected that the global smelting increase in 2021 will be close to 850,000 metal tons. Taking into account the demand for buried inventories brought about by new and resumed production capacity, it is expected that the global concentrated copper supply and demand will generally maintain a balance in 2021.

【Trading Strategy】

1. In recent days, Shanghai Copper Index decreased. The upward movement is weak. After the big rise, it needs to be adjusted. In the early stage, it is suggested to close the previous position

2. Arbitrage: The spread of CU12-1 is narrowed to over 10 yuan/ton, hold the long position in the market.

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