Crude oil

Crude oil: The US dollar continues to depreciate, and oil prices continue to be strong
Yesterday, the Democrats won the control of the Senate, boosting the expectations of increasing fiscal stimulus. However, Trump supporters rushed into the Capitol and interrupted the election certification process, creating uncertainty for the market. However, the overall market risk appetite has rebounded and the dollar has depreciated. It still supports the oil prices. However, from the perspective of crude oil itself, although Saudi Arabia has unexpectedly reduced production, this also confirms that the demand recovery in the first quarter may be less than expected, thus forming a pattern of weak supply and demand. The magnitude and speed of demand recovery relies on the rise in oil prices. In the future, we still need to pay attention to the development of the epidemic and the US fiscal stimulus. From the current situation of the crude oil market, it is not optimistic at present. The sales of crude oil in West Africa are relatively low and the market demand is weak. The purchasing volume of India and China was obvious decreased.
Strategy: Be cautious.

Risk: Iranian oil returns to the market, the U.S. dollar appreciates sharply, and the epidemic develops beyond expectations (For reference only)

Iron Ore
Iron Ore

The position on I2101 contract decreased by 67 and closed at ¥1111.5 per ton, the position on I2105 contract decreased by 21000 and closed at ¥1034 per ton, the spread of Iron 1-5 contract is 77.5, the spread of Iron 5-9 contract is 63.5. In terms of spot, the PB powder in Rizhao Port was ¥1,181 per ton. The price of Karara in Rizhao Port was ¥1174 per ton, the discounted warehouse price was ¥1186 per ton, the price of mixed powder warehouse receipt was ¥1167 per ton.

【Important News】

1. Mysteel: It is estimated that the domestic production of iron fine powder in December was 23 million tons, a decrease of 500,000 tons from November and an increase of 1.399 million tons from the same period last year.
【Trading strategy】

1. In terms of the inventory, the total iron ore inventory of the six ports in Diangang North was 71.38 million tons, a decrease of 2.7 million tons from the previous month, which was a large decrease. In terms of varieties, high- and medium-grade fines were reduced and low-grade fines were accumulated. In terms of shipments, the new round of data shows that shipments have fallen after the previous impulse. In Australia, the volume has decreased significantly, but it is still at a high level, which does not affect the recent increase in arrivals. The port of DAMPIER in Australia has an overhaul plan, which is expected to affect the shipments. The volume is 920,000 tons. On the demand side, due to the wide range of temperature drops, steel mills’ ports have reduced cargo and the average daily port dredging has dropped more; at the same time, the steel mills will use their in-plant inventory to meet the daily production, and replenishment needs are expected in the later period. At the same time, the average daily molten iron output slightly increased by 0.56 to 245.10, and steel mills are still enthusiastic about production. It is expected that there is still strong support on the iron ore and it is suggested to long 05 or 09 iron contract.
Arbitrage: Focus on the 05-09 iron contract. (for reference only)

PTA

PTA: PX continues to rise, pushing up the cost of PTA Gradually enter the seasonal accumulation period from January to February. In terms of the unilateral strategy, it is advised to be cautions due to covid-19. For the strategy across the period, arbitrage opportunity is ready. For the risk, there will be a decrease on the rate of polyester before the spring festival.

Natural Rubber
Rubber: The arrival volume decreased and port inventory dropped slightly
On Jan 6, the most active traded RU contract closed at 14,375 (-40) yuan/ton, the price of mixed rubber was 11,750 (-100) yuan/ton, the basis of most active traded contract was -575 yuan/ton (+90); the open interest of top 20 active traded long positions was 95,089 (-488) lots, the open interest of top 20 active traded short position 143,060 (+3320) lots, and the net short position was 47,971 (+3808).

On Jan 6, the most active traded NR contract closed at 10,700 (+15) yuan/ton, the STR in Qingdao Free Trade Zone was 1,650 (-10) US dollars/ton, the SMR was 1,620 (0) US dollars/ton, and the SIR was 1,590 (0) US dollars/ton. The basis of most active traded contract was -428 (-40) yuan/ton.

As of December 31: the total inventory of the exchange was 172,862 (+2042) lots, and the warehouse receipts of exchange were 160,570 (+1800) lots. Raw materials: sheet rubber 57 (0), cup lump 38.5 (+0.4), latex 51 (+1), RSS3 60.56 (+0.63).

As of December 31, the domestic all-steel tire operating rate was 54.89% (-2.16%), and the domestic semi-steel tire operating rate was 54.91% (-2.07%).

Viewpoint: The price of rubber remained strong yesterday and the latest port inventory still declined slightly, mainly due to the decrease in port arrivals. At present, the market continues to worry about supply reduction and the overall supply side support is strong. This week, due to the improvement of air in Shandong area, demand may rebound from the previous month, but due to export is still restricted, the rebound is expected to be limited. The overall supply and demand will show an improvement from the previous month.
Strategy: Be cautious

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

Copper

Copper

LME copper prices fluctuated and closed at $8073/ton, up by $22.5/ton, an increase of 0.28%, and increased 646 lots to 311,000 lots

【Important Information】

1. On the afternoon of January 6, local time, according to statistics from various US media, the last two seats in the Georgia Senate election were all owned by the Democratic Party, resulting in a 50 vs. 50. In addition, The one vote that Vice President Harris could cast when the vote was deadlocked allowed the Democratic Party to take control of Congress, realizing the so-called "Democratic Sweep" (the President and both houses of Congress are led by the Democratic Party).
2. At 3 a.m. on Thursday, the Federal Reserve announced the minutes of its December monetary policy meeting, promising to maintain bond purchases before the economy improves substantially and to fully greet the market before reducing the bond purchases. The minutes of the meeting also showed the Fed’s concerns about the economy: “The economic recovery so far has been stronger than expected, indicating that the recovery of economic activity is better than previously thought, but recent indicators indicate that the recovery has slowed. As the epidemic impact get worse, the expansion rate is expected to slow further in the coming months."
3. [SMM survey: Under the restriction of traffic control and personnel flow, some copper production companies in Xingtai have been suspended. Recycled copper rod manufacturers reported to SMM that their business was greatly affected by the closure of the Ningjin area in Xingtai.
【Trading Strategy】

1. Yesterday's Georgia State Senate election was swept by the Democratic Party, which was considered as a positive benefit beyond expectations. The market expects that the Biden administration may introduce further stimulus policies. However, the recent appreciation speed of RMB has also been relatively fast. Coupled with the decline in industry consumption and ample supply of scrap copper, there is not much driving force on the fundamentals and the macro and fundamentals have not formed a resonance. Shanghai Copper has temporarily maintained a fluctuated trend.
2. Arbitrage: Hold the current position.

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