Crude oil: The impact of the cold wave is short-term, and US crude oil inventories continue to decline.
The U.S. cold wave has had a significant impact on upstream oilfield production, pipeline transportation, midstream refining and downstream refined oil consumption. The upstream oilfield production affects about 3 to 4 million barrels per day, and the U.S. Gulf refinery shuts down about 4.4 million barrel/day, some pipelines are temporarily suspended, and the gap between gasoline and diesel has increased significantly. However, from the perspective of the impact time, as the temperature rises, it is expected that production will quickly resume this weekend, and there is no equipment damage in the refinery. Operation will resume after the power outage. We believe that the current US cold wave is only a short-term impact factor rather than a major market contradiction. At present, it is still a mismatch between supply and demand caused by OPEC’s overly conservative production restriction strategy. In the future, we will pay attention to OPEC’s relaxation of production restrictions on March 4.
Strategy: Be cautions, arbitrage opportunity on Brent or WTI
Risk: Iranian oil returns to the market ahead of schedule, OPEC substantially increases production (For reference only)
The price of iron ore futures increased, the position on I2105 contract closed at ¥1138.5 per ton, the spread of Iron 5-9 contract is 124. In terms of spot, the PB powder in Rizhao Port was ¥1,157 per ton, the discounted SSF price was ¥1202 per ton.
1. Mysteel: China’s 45 ports’ arrivals totaled 20.611 million tons, a decrease of 631,000 tons from the previous month; the six northern ports’ arrivals totaled 10.034 million tons, a decrease of 1.156 million tons from the previous month. The total arrival volume of China's 26 ports was 19.332 million tons, a decrease of 818,000 tons from the previous month.
2. Mysteel: This week, 41 of the 126 blast furnaces in Tangshan area were overhauled (excluding long-term shutdown), and the total volume of the overhauled blast furnaces was 343,760m³; the weekly output was about 692,500 tons, and the capacity utilization rate was 75.29%, compared with before the holiday (February 4). A decrease of 0.6%, a decrease of 3.55% from the same period last month, and a decrease of 1.02% from the same period last year. Compared with the same period last year (lunar calendar), it decreased by 11.34%.
1. With strong performance in overseas markets and a significant drop in shipments from overseas ore, the price of iron ore after the holiday has opened higher. It is estimated that the volume of arrivals to the port may decrease in the later period based on the shipping time. In terms of demand, steel plants in the festival mainly consume warehouses. At present, the overall level of in-plant inventory is not high. The total inventory days of steel plants are on average around 23 days. Port steel plants have about 10 days of inventory. The replenishment demand is expected to be completed before the end of the month. The output of molten iron is relatively strong during the holidays, which is good for iron ore demand. The accumulation of downstream building materials inventory is expected, but the inventory amount is still high. After the holiday, we need to pay attention to the time and intensity of the return of terminal demand. It is suggested to hold the long position on iron ore. The risk is that the port's iron ore inventory is greatly accumulated and the Ministry of Industry and Information Technology has increased its efforts to reduce crude steel production.
2. Arbitrage: Opportunity on Iron ore 5/9 (for reference only)
PTA: Under the background of the continuous rise of crude oil, TA continues to increase.
TA in February accelerates the seasonal accumulation of inventory, and TA processing fees are expected to be decreased; however, the de-stocking of PX in February increased, and the increase in PX processing fees is more flexible than the decreasing of TA processing fees . In terms of the unilateral strategy, it is advised to be cautious, arbitrage opportunity is not yet ready. For the risk, Terminal resumption progress after the holiday, the seasonal overhaul of polyester and the sustainability of gasoline premium on the supply and demand
Rubber: Prices of overseas raw materials have risen, and cost support has increased
On Feb 18, the most active traded RU contract closed at 15,205 (+525) yuan/ton, the price of mixed rubber was 12,300 (+350) yuan/ton, the basis of most active traded contract was -305 yuan/ton (+225); the open interest of top 20 active traded long positions was 85,781 (+6196) lots and the short position was 132841 (+5214), net short position was 47,060 (-982).
On Feb 18, the most active traded NR contract closed at 11,140 (+340) yuan/ton, the STR in Qingdao Free Trade Zone was 1,735 (+100) US dollars/ton, the SMR was 1,695 (+80) US dollars/ton, and the SIR was 1,670 (+80) US dollars/ton. The basis of most active traded contract was -362 (+200) yuan/ton.
As of Feb 10 the total inventory of the exchange was 174,746 (0) lots, and the warehouse receipts of exchange were 167,940 (0) lots. Raw materials: sheet rubber 59.59 (+1.84), cup lump 41.45 (+0.65), latex 58 (+3), RSS3 64.42 (+0.63).
As of Feb 10, the domestic all-steel tire operating rate was 35.56% (-16.11%), and the domestic semi-steel tire operating rate was 23.15% (-32.86%).
Viewpoint: The increase in external rubber prices and the sharp increase in raw material prices in Thailand's main producing areas brought about a supplementary increase in domestic rubber yesterday. However, it will take time for domestic downstream demand to recover, and the drive is still insufficient, causing prices to rise and fall. With the continuous advancement of vaccines, the expectation of further recovery in overseas demand is increasing. It is expected that the support for external rubber prices will be obvious. The domestic market needs to focus on the opening of the main domestic production areas in March. The rhythm may need to be paid attention to after the price rises. Short-term adjustment risk. Overall, the recovery of domestic and overseas demand after the year is still the main line, and the price of rubber is still expected to fluctuate strongly.
Strategy: Be cautious
Risks: a substantial increase in production, continued accumulation of inventories, a decrease in demand.
LME copper prices closed at $8606/ton, up by $193/ton, an increase of 2.29% and decreased 1468 lots to 195000 lots.
1. U.S. Treasury Secretary Yellen said that despite recent strong retail data and record highs in U.S. stocks, the U.S. still needs to introduce $1.9 trillion in relief measures.
2. US economic data on Thursday: The number of people applying for unemployment benefits for the first time last week hit a four-week high, and the previous week's data was also revised up. The number of housing starts in January fell for the first time since August 2020.
1. The recent macro atmosphere is positive for the capital market. On the one hand, it comes from the market’s expectations of the 1.9 trillion stimulus policy. On the other hand, the US vaccination has accelerated. The global stock market is on the rise as a whole, and the market is optimistic. Optimism is spreading in the short term, and copper prices may still show an upward 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. Container shipping capacity is restrained by the epidemic, and the spot is still tight. However, consumption is stronger than in previous years, and the seasonal accumulation in the first quarter of this year may not be as good as in previous years. It is suggested to take arbitrage opportunity.
3.Options: Hold the current positions. (For reference only)