Crude oil

Crude oil: Different opinions on the balance sheet for the three major institutions appear
The monthly reports of the three major institutions were all released as of last week. Affected by the epidemic, EIA and IEA revised down their demand growth forecasts for this year, while OPEC relatively feel optimistic demand forecasts remained unchanged. Overall, the trend of demand growth this year has not changed, but the pace and magnitude of the recovery are still affected by the epidemic and vaccines and there is great uncertainty, Whether OPEC's output will increase significantly after the second quarter is also the focus of the current market. Overall, the current balance sheet of the three major institutions hold different opinions. Demand: EIA estimates that demand growth in 2021 is estimated to be 5.56 million barrels per day, a decrease of 220,000 barrels per day from the previous month, mainly due to the lower demand in the United States and Europe. OPEC predicts that demand growth in 2021 is estimated at 5.9 million barrels per day, unchanged from the previous month. The IEA predicts that demand growth in 2021 is estimated to be 5.45 million barrels per day, which is revised down by 240,000 barrels per day from the previous month. The demand for OECD and non-OECD countries has been revised down in the first quarter. Non-OPEC supply: EIA expects that 2021 non-OPEC supply will increase by 1.22 million barrels/day compared with the previous month’s estimate. EIA predicts that total US liquid supply will increase by 120,000 barrels/day in 2021 year-on-year, but crude oil supply will fall by 190,000 barrels. /Day, mainly due to increased supply of NGLs. OPEC expects that 2021 non-OPEC supply will increase by 840,000 barrels/day, which is little changed from the previous month, mainly due to the upward revision of Latin American supplies. OPEC expects that US liquid production will increase by 380,000 barrels/day year-on-year. The IEA expects that non-OPEC supply in 2021 will increase by 580,000 barrels/day compared with the same period last year, up 40,000 barrels/day from the previous month. IEA expects that the total US liquid supply in 2021 will increase by 310,000 barrels/day. OPEC production: According to EIA, OPEC's production in December increased by 220,000 barrels/day to 25.26 million barrels/day, of which Libya’s output increased by 160,000 barrels/day. Other countries have not changed much, with a 104% reduction in compliance rate. OPEC's December OPEC production increased by 280,000 barrels/day to 25.36 million barrels/day, OPEC’s overall production cut compliance rate was 102%, and Libya’s production increased by 140,000 barrels/day to 1.22 million barrels/day. According to IEA, OPEC production in December increased by 150,000 barrels/day to 25.2 million barrels/day and OPEC’s overall compliance rate was 105%. Call on OPEC: EIA estimates COO for 2021 to be 27.8 million barrels/day, which is revised down by 490,000 barrels/day from the previous month. According to the EIA balance sheet, the difference between supply and demand in the first to fourth quarters is -2.3 million barrels/day. 400,000 barrels/day, 200,000 barrels/day, and 200,000 barrels/day, EIA sharply revised down the demand growth next year this month and believes that OPEC will significantly increase production in the second half of the year. OPEC estimates COO for 2021 at 27.17 million barrels per day, which is little changed from the previous month. From the first to the fourth quarter, COO was 2680, 2770, 2720, and 26.9 million barrels per day. The IEA estimates COO for 2021 at 27.7 million barrels per day, which is 340,000 barrels per day lower than the previous month. From the first to fourth quarters, COO was 2620, 2640, 2860, and 29.6 million barrels per day.

Strategy: Be cautious.

Risk: No (For reference only)

Iron Ore
Iron Ore

The price of iron ore futures decreased, the position on I2105 contract closed at ¥1046 per ton, the spread of Iron 5-9 contract is 78.5. In terms of spot, the PB powder in Rizhao Port was ¥1,137 per ton, down by 3 yuan, the discounted SSF price was ¥1200 per ton.

【Important News】

1. Mysteel: Russia's Novolipetsk Group (NLMK) released a report on the production and sales of steel and iron ore for the fourth quarter of 2020. The report shows: In terms of output: in the fourth quarter of 2020, the total iron ore output was 4.92 million tons, an increase of 20% from the previous quarter. And an increase of 9% year-on-year. In the fourth quarter, the output of iron ore pellets was 1.83 million tons, refined powder 2.84 million tons and sintered ore 260,000 tons. The total iron ore output in 2020 is 18.51 million tons, a year-on-year increase of 0.4%. In 2020, the total output of pellets is 6.8 million tons, the total output of fine powder is 10.69 million tons, and the total output of sinter is 1.02 million tons. In terms of sales volume: NLMK's iron ore sales volume in the fourth quarter was 4.82 million tons, an increase of 17% month-on-month and 6% year-on-year. The total sales of iron ore in 2020 was 18.41 million tons, a decrease of 0.2% from last year.
2. Mysteel: On January 22, Beijing time, Australia's Mount Gibson Mining Company (Mount Gibson) released its fourth quarter 2020 operation report. The report showed that iron ore sales in the fourth quarter of 2020 were 930,000 tons, a decrease of 32.2% from the previous quarter. A year-on-year decrease of 32.7%; annual iron ore sales volume was 4.487 million tons
【Trading strategy】

1. At present, the total iron ore inventory of 45 ports is 124.38 million tons, an increase of 260,000 tons from the previous month. Among them, there is an increase in Brazilian mines and a decrease in Australian mines. In the six northern ports of Diangang, there is a large number of medium and high grade fine ore stocks, while the remaining varieties are all down. MNPJ stocks have increased for three consecutive weeks. Entering the first quarter, there was a seasonal decrease in supply from the fourth quarter, the recent increase in arrivals to ports has been relatively large, mainly due to the impulse of early shipments. In the later period, there will be maintenance plans for the berths in the Australian port, it is expected to affect the total iron ore shipments of about 2.44 million tons. On the demand side, the average daily molten iron output dropped slightly by 0.32 to 2.4255 million tons and the average daily dredging port increased by 22.26 to 3.87 million tons and the dredging port returned to the high level in the second and third quarters. After several weeks of replenishment, steel mill inventories have rebounded. At present, the supply of ball blocks is tight, and steel plants are gradually turning to low-quality ball resources. The current discounted spot warehouse receipts of iron ore are relatively large, and the space below is also limited. With the slow release of supply-side capacity and the expected demand for next year, iron ore is still in a tight balance. It is expected that there will be destocking of port stocks after the holiday, it is suggested to hold the long positions on iron ore.
2. Arbitrage: Opportunity on Iron ore 5/9 (for reference only)

PTA
PTA: The terminal load accelerates the seasonal decline, Fujian Baihong new equipment is put into use
In January, under the background of Yisheng Ningbo's inspection and maintenance and the seasonal decline of polyester, the inventory was slightly accumulated. Seasonal accumulation became more obvious in February. In terms of the unilateral strategy, it is advised to be cautions on the long position, arbitrage opportunity is ready. For the risk, the decline in the negative rate of polyester year ago and the continued improvement of the supply and demand of aromatics by gasoline premium

Natural Rubber
Rubber: Out-of-zone inventory continues to decline, and there is support below the rubber price
Rubber prices fluctuated and dropped last week, mainly due to concerns about the partial spread of the domestic epidemic and the reduction in the flow of people during the Spring Festival in China, which may lead to a decline in tire demand and the drag of the downward price of raw materials, made rubber prices weaker last week. As of January 22, the total inventory of domestic exchanges was 174,664 tons (+832) and the amount of futures warehouse receipts was 166,750 tons (+2880). The domestic production was completely stopped and the increase in warehouse receipts continued to slow down recently. As of January 17, inventory in Qingdao Free Trade Zone maintained a slight downward trend, mainly due to the continuation of raw material stocking in some domestic tire factories. The spot market prices rose first and then fell last week. According to Zhuochuang's understanding, the Spring Festival is approaching and some employees from the tire factory return to their hometowns. As a result, the factory's start-up has declined and the pre-holiday stocking has gradually come to an end. The market buying sentiment is sluggish, so the market transactions during the week were relatively quiet. RSS3 and SMR20# have little price fluctuation due to limited supply; while the overall mixed rubber shows a slight upward trend with the market and overall trading is not as good as usual. At present, some areas of southern Thailand’s production areas are suffering from severe leaf fall disease, which has led to a slight reduction in the release of raw materials, but the overall supply has not been significantly reduced. On the contrary, the purchase price of raw material glue continues to fall sharply, which puts the overall upward pressure on the U.S. dollar market under greater pressure. It can be seen that the current tire factory is declining, the pre-holiday stocking is basically over, a small number of purchases are mainly near the port and the spot, the pace of domestic depots outside the Qingdao Free Trade Zone is accelerating and the transaction of US dollar cargo is low. As of last weekend, the rubber premium was 1,450 yuan/ton (-250) for synthetic rubber and styrene-butadiene rubber continued to rise, causing the price difference to narrow slightly last week. In terms of downstream tire operating rate, as of January 21, the operating rate of all-steel tire companies was 67.95% (-2.1%), and the operating rate of semi-steel tire companies was 65.95% (-1%). As the Spring Festival approached, some personnel returned to their hometowns, which brought about a drop in the operating rate of the tire factory last week. It is expected that the operating rate will remain weak in the later period.

Viewpoint: With the completion of the staged stocking of downstream tire factories, the spot price will mainly fall. As the Spring Festival approaches, the operating rate of tire factories will gradually enter a seasonal downward trend. At present, the overall demand side is showing a weak pattern and the supply side is about to enter the off-season of rubber tapping after January. It is expected that the supply will be limited in the later period and the continuous decline in domestic port inventory will also support the rubber price. It is expected that there is limited room for adjustment below the rubber price. In the mid-term perspective, the slow recovery of overseas demand is the main line. As the demand for rubber will further increase, the price of rubber is expected to remain strong and volatile. It is recommended to focus the opportunity when the price is low.
Strategy: Be cautious

Risks: Increased supply has brought stocks back up sharply, the impact of the epidemic and other impacts, demand continues to weaken, and funds are tight

Copper

Copper

LME copper prices closed at $7986/ton, down by $48/ton, a decrease of 0.6% and increased 199 lots to 306,000 lots

【Important Information】

1. According to customs data, China imported 38,100 tons of copper ingots in December, a decrease of 10% from the previous month and a year-on-year increase of 25%. After the implementation of the standards for recycled copper and brass raw materials, the enthusiasm for copper ingot imports declined. A total of 450,900 tons were imported from January to December, a year-on-year increase of 109%.
2. The overall performance of refined copper rod consumption was poor. Power cables are in the seasonal off-season and real estate, infrastructure and other projects have basically entered a phase of suspension, superimposed on downstream concerns that the epidemic will enter the holiday rhythm in advance, and the demand for construction poles has continued to weaken. The copper rod factory, which takes orders from the State Grid as its main sales channel, has reported to us that since last week, new orders for copper rods have gradually decreased and consumption has entered the off-season. In addition, we have learned that the current pressure on the sales of copper rod factories has increased and corporate inventories have increased, some copper rod factories in southern and northern China have also stopped production for maintenance. As we all know, the consumption of copper rods is mainly driven by the demand side of power cables. At present, the consumption of copper rods is weak. In addition to the impact of the low season at the end of the year and poor orders from the State Grid, the closure of the city due to the new crown epidemic in the northern Ningjin area also affects the consumption of copper rods. Impacted. Affected by the Ningjin area, many northern low-oxygen rod companies were forced to move to the "Southern Battlefield" and the price difference advantage of scrap copper rods will undoubtedly have another impact on the consumption of refined copper rods, which will have a poor consumption in the refined copper rod market.
3. US President Biden warned the people to prepare for the darkest days of the epidemic and announced a "wartime" epidemic prevention plan, but Republican lawmakers insisted on opposing a large-scale bailout case.
【Trading Strategy】

1. The copper inventory is still very low and it is still going to destock in the traditional warehouse season. In January last year, the world (three major exchanges + copper stocks in bonded areas) totaled 110,000 tons of warehouses. So far this year, 50,000 tons of warehouses have been destocked. The expectation of warehouses in the first quarter is not strong. Funds are more cautious and copper prices may maintain a volatile trend.
2. Arbitrage: There will be some problems when importing copper to the port from January to February. The Chilean terminal is affected by waves and the container capacity is suppressed by the epidemic and the spot is still tight. The epidemic in Malaysia has worsened and the import of recycled copper is also facing tightening. The seasonal accumulation in the first quarter of this year may not be as good as in previous years, and it is not recommended to consider monthly reverse arbitrage. After consumption resumes after the Spring Festival, arbitrage can be considered.
3.Options: Short on cross market option: CU2103-C-61000 and CU2103-P-54000 (For reference only)