Crude oil

Crude oil: Europe and the United States enter the Christmas holiday, crude oil prices turn down
The European and American markets have entered the Christmas holiday and the market has gradually turned down. Recently, the Ministry of Commerce issued the first batch of non-state crude oil import quotas for 2021, totaling 122 million tons, an increase of 18% from the first batch of quotas last year. In terms of the situation, traditional local refining increased by 12% year-on-year, private large-scale refining increased by 56% and other entities decreased by 1%. In the future, private large-scale refining will replace traditional refining and become the main force in the increase in domestic crude oil imports but the current problem is still the balance of domestic refined oil supply and demand. If the overseas refined oil demand gradually recovers next year and the domestic refined oil exports get back on track, under the background of global refining surplus, private large refineries will squeeze the operating rate of foreign refineries. However, if the overseas demand is not good and the export of refined oil is restricted, the successive commissioning of large private refineries will increase the competition in the domestic refined oil market and squeeze the market share of main and local refineries.
Strategy: Hold the short position or hold the current position.

Risk: Geopolitical risks in the Middle East, the dollar depreciates sharply. (For reference only)

Iron Ore
Iron Ore

On December 24, 2020, the position on I2101 contract decreased by 933 and closed at ¥1092 per ton, the position on I2105 contract decreased by 16,500 and closed at ¥1022 per ton, the spread of Iron 1-5 contract is 70, the spread of Iron 5-9 contract is 70. In terms of spot, the PB powder in Rizhao Port was ¥1,116 per ton. No transaction on Karara in Rizhao Port, the discounted warehouse price was ¥1140 per ton, the price of mixed powder warehouse receipt was ¥1170 per ton.

【Important News】

1. Mysteel: BHP Billiton said on Thursday that five years after a fatal dam disaster in Brazil, the company has met the permit requirements for restarting operations. Samarco, a joint venture with Brazil’s Vale, has begun producing iron ore pellets.

【Trading strategy】

1. This week, the total iron ore inventory in 45 ports slightly increased by 42,300 tons to 124.08 million tons, basically the same as last Thursday. Among them, Australian mines and Brazilian mines increased by 490,000 tons in total and the traded mines increased by 920,000 tons. In terms of different regions, except for the environmental protection and other factors affecting the efficiency of port operations in North China and South China, inventories in other regions have all declined. The total inventory of the six northern ports of Diangang increased by 1.7 million tons. Except for the reduction of ball blocks, the remaining varieties are all accumulated and MNPJ inventory has returned to more than 10 million tons. On the demand side, the average daily port volume was 3.0396 million tons, an increase of 68,000 tons from last week. Steel mills are actively accumulated the stocks, currently there are 155 ships in the port increasing by 18. On the spot side, the iron ore spot market price rebounded slightly and the market trading volume was fair. On the futures side, the price fell from a high level, and in the short-term, the price will follow the fluctuation of the material, it is suggested to hold the long position on 05 or 09 iron ore. (for reference only)

PTA

PTA: Filament production and sales are improving, PX still has cost support for PTA
Fuhua's 4.5 million ton overhaul announced. In December we change our expectation from rigid accumulation to destocking slightly. December.

In terms of the unilateral strategy, it is advised to be cautions and hold the long position. For the strategy across the period, arbitrage opportunity is ready. For the risk, TA factory inspection and maintenance progress.

Natural Rubber

Rubber: Shanghai 01 contract is near the delivery, pay attention to short-term delivery pressure
On December 24, the most active traded RU contract closed at 14,220 (+115) yuan/ton, the price of mixed rubber was 11,500 (+50) yuan/ton, the basis of most active traded contract was -635 yuan/ton (+320); the open interest of top 20 active traded long positions was 97,772 (-99) lots, the open interest of top 20 active traded short position 139,121 (+1785) lots, and the net short position was 41,349 (+1884).

On December 24, the most active traded NR contract closed at 10,370 (+90) yuan/ton, the STR in Qingdao Free Trade Zone was 1,595 (+15) US dollars/ton, the SMR was 1,547.5 (+2.5) US dollars/ton, and the SIR was 1,545 (0) US dollars/ton. The basis of most active traded contract was -271 (-120) yuan/ton.

As of December 18: the total inventory of the exchange was 166,298 (+3049) lots, and the warehouse receipts of exchange were 149,210 (+15580) lots. Raw materials: sheet rubber 58 (-0.9), cup lump 38 (-0.75), latex 50.5 (-1), RSS3 60.57 (+0.28).

As of December 17, the domestic all-steel tire operating rate was 71.79% (-11.39%), and the domestic semi-steel tire operating rate was 60.45% (-8.87%).

Viewpoint: The price of rubber remained in a narrow range yesterday. As market sentiment eased, the price of rubber stopped falling. However, due to the close delivery of the Shanghai 01 contract, the short-term performance is still under pressure due to the continued increase in warehouse receipts and the pattern of premiums in futures prices. From a fundamental point of view, long and short opportunities coexist. The supply side may be implemented due to the increase of rain volume in Thailand and the later port closure measures brought about by the aggravation of the local epidemic, which will affect its export volume. The domestic out-of-region inventory is expected to continue to decline and the supply side is supported. The weaker domestic demand from the previous month has dragged down prices. It is expected that the short-term rubber price will fluctuate and the spread between RU and NR is expected to narrow.
Strategy: Neutral

Risks: a substantial increase in production, continued accumulation of inventories, a decrease in demand.

Copper

Copper

LME copper prices fluctuated and closed at US$7,830.5/ton, down by US$16.5/ton, a decrease of 0.21%, and increased from 88 lots to 309,000 lots

【Important Information】

1. The United Kingdom and the European Union have reached a historic post-Brexit trade agreement. After December 31, the United Kingdom and the European Union will conduct zero-tariff and quota-free merchandise trade but this does not apply to the service industry or the financial services industry. The British Parliament is no longer subject to the EU
2. [MMG: Peru’s Las Bambas copper mine strikes continued, the concentrate mines delivery encounters "force majeure] MMG said in a report that local residents blocked a road for protests. For more than two weeks, the company’s Las Bambas copper mine in Peru has been affected. The company said that the demonstrations and local road blockades have temporarily blocked its mineral transportation, which forced it to declare that the performance of some of the contracts has encountered force majeure.
【Trading Strategy】

1. The US stimulus policy has fallen into a state of anxiety again, which poured cold water on the market. Near Christmas and New Year's Day, there is a demand for capital to be profitable, and copper prices may enter a state of shock. The LME is closed today.

2. Arbitrage: Hold the current position.

3.Options: Short on cross-market options, CU2102-C-60000, CU2102-P-54000. (For reference only)