Crude oil

Crude oil: There are adjustments on the commodity index fund which may support the oil prices

In addition to the macro and fundamental situations, we need to pay attention to the short-term impact of commodity index fund position adjustments. From the perspective of scale, the size of commodity index funds is roughly US$300 billion and the crude oil accounts for a relatively large proportion of commodity indexes. Therefore, it is an important part that generally, commodity index funds such as Goldman Sachs and Dow Jones adjust their weights and positions in January. Considering that crude oil fell sharply throughout the year last year, and the increase is far behind other varieties such as metals, Therefore, it is expected that this adjustment will be a product with a large capital inflow, and this factor will support the strong oil price in the short term.
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 95 and closed at ¥1141.5 per ton, the position on I2105 contract decreased by 15900 and closed at ¥1074.5 per ton, the spread of Iron 1-5 contract is 67, the spread of Iron 5-9 contract is 69. In terms of spot, the PB powder in Rizhao Port was ¥1,130 per ton. The price of Karara in Rizhao Port was ¥1180 per ton, the discounted warehouse price was ¥1173 per ton, the price of mixed powder warehouse receipt was ¥1178 per ton.

【Important News】

1. Mysteel: China Iron and Steel Association conducted a video conference on January 6 with 6 president units and other companies on how the industry will control capacity growth, ensure production balance, restrain the price increase of imported iron ore and reduce carbon emissions in 2021. The China Iron and Steel Association emphasized that at present, the three major points need to be solved in order to better develop China’s still industry, the results of supply-side reforms and capacity reduction are not yet solid and the level of the industrial chain supply chain needs to be further improved.
2. Mysteel: This week, 33 of the 126 blast furnaces in Tangshan area were overhauled (excluding long-term production shutdowns). The total volume of the overhauled blast furnaces is 25830m³; the weekly output is about 540,700 tons and the capacity utilization rate is 80.56%, which is an increase of 0.32% from last week. It increased by 1.83% in the same period of the month and decreased by 3.79% 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 weakening of the impact of environmental protection production restrictions on the port dredging, some port closures and transportation restrictions have been lifted. At the same time, the impact of high ore prices in the previous period has been increased. Increased by 22.16 to 3.0226 million tons; 4 new blast furnaces resumed production this week, and 10 blast furnaces were shut down for maintenance, mainly in North China. The average daily molten iron output dropped by 0.82 to 2,442,800 tons, and the blast furnace operating rate also decreased. At the end of the year, steel mills have increased their overhauls, and the output of molten iron may decline slightly later. There are currently 159 vessels at the port increased by 1. It is expected that there is still strong support below the iron ore disk, and it can be long 05 or 09 iron ore.

(for reference only)
2. Arbitrage: Focus the opportunity on 05-09 iron contract

PTA

PTA: PX continues to be strong, PTA continues to increase in cost
Gradually enter the seasonal accumulation period from January to February. In terms of the unilateral strategy, it is advised to be cautions on the long position, arbitrage opportunity is ready. For the risk, there will be a decrease on the rate of polyester before the spring festival.

Natural Rubber
Rubber: Concerns on the supply-side concerns, rubber prices have risen sharply
On Jan 7, the most active traded RU contract closed at 14,875 (+500) yuan/ton, the price of mixed rubber was 12,000 (+250) yuan/ton, the basis of most active traded contract was -775 yuan/ton (-200); the open interest of top 20 active traded long positions was 102,125 (+7036) lots, the open interest of top 20 active traded short position 144,401 (+1341) lots, and the net short position was 42,276 (+5695).

On Jan 57 the most active traded NR contract closed at 11,015 (+315) yuan/ton, the STR in Qingdao Free Trade Zone was 1,680 (+30) US dollars/ton, the SMR was 1,660 (+40) US dollars/ton, and the SIR was 1,630 (+40) US dollars/ton. The basis of most active traded contract was -484 (-56) 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 57.7 (+0.70), cup lump 38.65 (+0.15), latex 52 (+1), RSS3 61.72 (+1.16).

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 rose sharply yesterday, due to Thailand’s epidemic and the high ocean freight rate, the market’s concerns about the reduction of domestic imports in the later period have intensified. At the same time, the price of raw materials in Thailand’s main producing areas continued to rise this week and the cost of rubber prices was strongly supported. On the demand side this week, due to the improvement of air quality in Shandong, the demand may rebound. However, exports are still restricted and the rebound is expected to be limited, the price of rubber is expected to remain strong and fluctuated.
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 $8172/ton, up by $99/ton, an increase of 1.23%, and decreased 6383 lots to 304,000 lots

【Important Information】

1. After the U.S. Congress officially recognized Biden as the next president, Trump abandoned his lawsuit seeking to invalidate the results of the Georgia election and promised to transfer power in an orderly manner. High-level Congress has stepped up efforts to pressure Trump to step down and many senior White House officials have also resigned to show their dissatisfaction with the president's incitement of violence in Congress.2. The US ISM manufacturing index rose to its highest level in December. In the past few months, the manufacturing industry has steadily recovered from the impact of the epidemic at the beginning of last year.
2. US economic data on Thursday: The number of people applying for unemployment benefits for the first time was basically the same month-on-month in the last week of 2020 and remained high level, indicating that the epidemic has continued to hit the job market. The trade deficit increased to the second highest on record in November due to rising import demand before the holiday season. The service industry unexpectedly accelerated the growth in December with rising corporate activity and new orders offsetting the drag on employment indicators.

3. The leader of the Peruvian Mining Association stated that Minmetals' Las Bambas copper mine in Peru suffered a three-week roadblock protest by the local people, resulting in a significant reduction in exports. If the protest cannot be resolved, Las Bambas Copper Mine may choose an opportunity to carry out equipment maintenance works
【Trading Strategy】

1. Yesterday, the U.S. Congress officially recognized Biden as the next president. Trump promised an orderly transfer of potential. Now that the Democratic Party has swept the president and both houses of Congress, the market expects that the Biden administration may introduce further stimulus policies. In fact, the underlying reason behind the price increase is still loose liquidity, and copper prices may remain strong in the short term.
2. Arbitrage: There will be some problems when importing the copper to the port in January. The Chilean terminal is affected by waves. In addition, the container capacity is suppressed by the epidemic. The spot is still in the tight balance. China may not start to accumulate the inventory until late January. It is suggested to focus on the opportunity on the cross period trade with Shanghai Copper contract
3.Options: Short on put option CU2102-P-56000. (For reference only)