Crude oil

Crude oil: Off-season superimposed on the impact of the epidemic, China's crude oil buying interest is weak
Recently, the ESPO crude oil discount has fallen sharply and the local refining operating rate has fallen. The market is concerned about the weakening of Chinese demand. From a seasonal perspective, Shandong local refining operating rate is expected to fall to about 55% in February, but taking into account the return home activities this year, with weakening of travel restrictions and the more severe epidemic prevention policies in the north, we expect that the operating rate of the refinery may be reduced to below 50% to prevent the expansion of refined oil storage. In addition, from a global perspective, from March to April is the centralized maintenance period for global refineries. Weak global demand is expected to continue for some time. However, the current supply is relatively tight. The February shipments of Russian Ural crude oil cargoes also decreased by 200,000 barrels per day from the previous month. The current market is weak in supply and demand. From the perspective of inventory , it keeps to de-allocate, so it is unlikely that the current oil price will fall sharply. The market is currently weak and fluctuating, and the trend of the US dollar affects the trend of crude oil.
Strategy: Be neutral

Risk: No (For reference only)

Iron Ore
Iron Ore

The price of iron ore futures decreased, the position on I2105 contract closed at ¥986.5 per ton, the spread of Iron 5-9 contract is 73. In terms of spot, the PB powder in Rizhao Port was ¥1,096 per ton, down by 32, the discounted SSF price was ¥1150 per ton.

【Important News】

1. Mysteel: This week, 39 of 126 blast furnaces in Tangshan area were overhauled (excluding long-term shutdowns). The total volume of the overhauled blast furnaces was 31610m³; the weekly output was about 622,400 tons, and the capacity utilization rate was 77.72%, an increase of 0.31% from last week. A decrease of 2.52% in the same period last year, a decrease of 8.91% compared to the same period last year.
2. Mysteel: Luo Tiejun, vice chairman of the China Iron and Steel Association, said that China's dependence on foreign iron ore exceeds 80%. To change this situation, efforts must be made to increase the supply of iron resources: one is to liberalize the import of scrap steel and increase the use of domestic scrap steel resources; the second is to accelerate the development of domestic mines and reduce taxes for domestic iron ore companies; The third is to support the acceleration of overseas mine development and expansion; and the scrap steel will not become the second "iron ore".

3. Mysteel: FMG's iron ore processing volume reached 44.2 million tons in the fourth quarter, down by 4% from the previous quarter and 4% year-on-year; the iron ore shipped in the fourth quarter reached 46.4 million tons, an increase of 5% from the previous year, and remained the same year-on-year; Its total iron ore shipment volume reached 180.3 million tons, an increase of 4% year-on-year.
4. Mysteel: In 2021, the target output of Anglo American's iron ore is 64-67 million tons, of which the Kumba mine area has a target output of 40-41 million tons and the Minas-Rio mine area has a target output of 24 to 26 million tons.

【Trading strategy】

1. At present, the total iron ore inventory of 45 ports is 125 million tons, which increased 625,100 tons from last Thursday. The increase of Australian ore is larger than that of Brazil. In terms of varieties, the inventory of fine powder and lump ore has increased, and the inventory of pellets has increased slightly. Shipping data from Port 19 of Australia and Brazil showed that the global shipments amounted to 26.24 million tons, a decrease of approximately 1.2 million tons. Both Australia and Brazil reduced their volumes, but non-mainstream shipments increased slightly. At the same time, arrivals at the ports have dropped recently, with a drop of 3.07 million tons. There will be maintenance plans for the berths at the port of Australia and Brazil. On the demand side, the average daily molten iron output dropped slightly by 1.59 to 2.4096 million tons, and the average daily dredging port dropped by 14.69 tons to 3.0407 million tons. Affected by the overall poor unloading situation of ports in winter, and the impact of port closures, epidemic prevention and heavy fog in North China and along the river, the port pressure increased significantly this week, the number of ships increased from 23 to 201. Yesterday the port ore prices were weak, and market transactions decreased. The mainstream spot products fell by an average of about 30-40 yuan; the overlapped processing industries reduced crude steel output to ensure the impact of the year-on-year decline news. The price of iron ore fell sharply, but the spot price was still near the discounted price of warehouse receipts; It is suggested to pay attention to the policy and the arrival of iron ore, and 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 weaving speeds up and reduces the load, and the polyester is promoted
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 neutral, arbitrage opportunity is ready. For the risk, the seasonal overhaul of polyester and the sustainability of gasoline premium on the supply and demand

Natural Rubber
Rubber: Raw material prices stopped falling, and rubber prices were supported
On Jan 28, the most active traded RU contract closed at 14,150 (-160) yuan/ton, the price of mixed rubber was 11,700 (-100) yuan/ton, the basis of most active traded contract was -450 yuan/ton (+110); the open interest of top 20 active traded long positions was 92,830 (+983) lots and the short position was 141426 (+761) ,net short position was 48,596 (-222).

On Jan 28, the most active traded NR contract closed at 10,455 (-145) yuan/ton, the STR in Qingdao Free Trade Zone was 1,635 (0) US dollars/ton, the SMR was 1,605 (-15) US dollars/ton, and the SIR was 1,585 (-5) US dollars/ton. The basis of most active traded contract was -172 (+141) yuan/ton.

As of Jan 22 the total inventory of the exchange was 174,664 (+832) lots, and the warehouse receipts of exchange were 166,750 (+2880) lots. Raw materials: sheet rubber 52.4 (-0.2), cup lump 38.15 (+0.15), latex 43.5 (+1.5), RSS3 55.73 (-0.84).

As of Jan 21, the domestic all-steel tire operating rate was 67.95% (-2.1%), and the domestic semi-steel tire operating rate was 65.95% (-1%).

Viewpoint: The price of raw materials in Thailand's main producing areas stopped falling yesterday. As the peak season is about to pass, the supply will enter the off-season after the year, and the rubber price supply side is still supported. As the Chinese New Year is approaching, the downstream operating rate is showing a downward trend combined with the development of the epidemic at domestic and abroad, making the recent rubber price trend weak. At present, rubber is still in a pattern of weak supply and demand, and the supply side has strong support. Under the main line of demand recovery after the year, rubber prices are expected to remain strong and volatile, but due to the high domestic absolute inventory, it takes time to digest, and the short-term trend may remain volatile.
Strategy: Be neutral

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

Copper

Copper

LME copper prices closed at $7904/ton, up by $61/ton, an increase of 0.78% and increased 4577 lots to 317,000 lots.

【Important Information】

1. [US GDP in the fourth quarter is less than expected] The US GDP in the fourth quarter increased by 4.0% year-on-year, which is estimated to be 4.2%, and the previous value was 33.4%.
2. In response to the second wave of the epidemic, the Peruvian government, President Francisco Sagasti announced that from January 31 to February 14, the capital Lima and 9 regions will be blocked to deal with the continuous spread of the epidemic. Peru is the world's second largest producer of copper concentrates and the second largest source of copper concentrate imports in China. In 2020, China's imports of concentrated copper from Peru will account for 22% of China's total imports. At present, the copper mines currently in production in Peru mainly include the Las Bambas copper mine of Apurímac, which will produce about 320,000 metal tons of concentrated copper in 2020; the Antamina copper mine under Ancash's Teck will produce about 120,000 copper concentrate in 2020 Metal tons; Cerro Verde copper mine under Freeport in Arequipa, the output of copper concentrate is expected to be about 380,000 metal tons in 2020; Antapaccay copper mine under Glencore, the output of copper concentrate in 2020 is expected to be about 100,000 metal tons. In the short term, the shipment of these mining products may be affected.
【Trading Strategy】

1. The United States announced overnight that the number of initial jobless claims for the week was lower than expected, US stocks closed higher, and copper prices rebounded. The funds are more cautious. The current copper price is still within the volatility range of Bollinger Bands, and there is no trending market. It is recommended to hold the current positions
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)