Crude oil

Crude oil: the three major institutions in the February report forecast greater divergence

The February report of the three major institutions reflected that the divergence between the three major institutions has further intensified. In terms of demand, EIA and IEA lowered the demand for the first three quarters. OPEC lowered the demand for the first quarter but raised the demand for the next three quarters. The year-on-year adjustment of annual demand is not significant, but this reflects the differences among institutions on the pace of demand recovery. OPEC and EIA believe that demand recovery will start in the second quarter, while IEA believes that demand recovery will be mainly in the third quarter. In terms of supply, IEA believes that the rebound in oil prices will significantly stimulate the resumption of shale oil production in the United States, but the estimates of EIA and OPEC are relatively conservative.

Demand: EIA estimates that the demand growth in 2021 is 5.38 million barrels per day, which is a downward revision of 180,000 barrels per day from the previous month, mainly due to the downward revision of demand in the United States and the Asia-Pacific region. OPEC predicts that demand growth in 2021 is estimated to be 5.79 million barrels per day, which is revised down by 110,000 barrels per day from the previous month. The IEA predicts that the demand growth in 2021 is estimated to be 5.43 million barrels per day, which is basically unchanged from the previous month. However, it is worth noting that the IEA believes that the demand in the second half of the year will increase by 4.25 million barrels per day compared to the first half of the year.

Non-OPEC supply: EIA expects that 2021 non-OPEC supply will increase by 1.39 million barrels/day year-on-year, an increase of 170,000 barrels/day from the previous month. EIA predicts that the total US liquid supply in 2021 will increase by 120,000 barrels/day year-on-year, but crude oil supply will drop by 22 year-on-year. Ten thousand barrels per day, mainly due to the increase in the supply of NGLs. OPEC expects 2021 non-OPEC supply to increase by 670,000 barrels/day, down 170,000 barrels/day from the previous month. The US supply has been revised down. OPEC expects that US liquid production will increase by 160,000 barrels/day year-on-year. The IEA expects that non-OPEC supply in 2021 will increase by 950,000 barrels/day compared with the same period last year, and it will be revised up by 400,000 barrels/day from the previous month. IEA expects that the total US liquid supply in 2021 will drop by 30,000 barrels/day from the same period last year and will be revised up by 310,000 barrels/day from the previous month Barrels/day.

OPEC production: According to the EIA standard, OPEC production in January remained unchanged at 25.26 million barrels per day. Due to the increase in quotas, the compliance rate for production cuts increased to 113%. OPEC's January OPEC production increased by 180,000 barrels/day to 25.5 million barrels/day. OPEC's overall production reduction compliance rate was 108%, and the output of various countries did not change much. According to IEA, OPEC's production in January increased by 240,000 barrels/day from the previous month to 25.45 million barrels/day, and OPEC’s overall compliance rate was 105%.

Call on OPEC: EIA estimates COO for 2021 at 27.53 million barrels/day, which is revised down by 270,000 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 million barrels/day,- 100,000 barrels/day, 400,000 barrels/day, 100,000 barrels/day. OPEC estimates COO for 2021 at 27.62 million barrels per day, which is an increase of 450,000 barrels per day from last month. From the first to fourth quarters, COO was 25.7, 28.1, 28.3, and 27.9 million barrels per day. The IEA estimates that the COO for 2021 is 27.12 million barrels/day, which is revised down by 580,000 barrels/day from the previous month. From the first to the fourth quarter, the COO is 25.4, 25.7, 28.1, and 29.3 million barrels/day.

Strategy: Tend to long position, but be cautious. Brent intertemporal positive set or unilateral multi-match

Risks: Iranian oil returns to the market ahead of schedule, OPEC substantially increases production.

Iron Ore
Iron Ore

The price of iron ore futures increased, the position on I2105 contract closed at ¥1156.5 per ton, the spread of Iron 5-9 contract is 127.5. In terms of spot, the PB powder in Rizhao Port was ¥1,176 per ton, the discounted SSF price was ¥1234 per ton.

【Important News】

1. Mysteel: Last week, in 45 ports across the country, the imported iron ore inventory was 126.4473 million tons, a month-on-month decrease of 621,700 tons; the average daily port volume was 2.9497 million tons, an increase of 101,200 tons.

2. Mysteel: Last week, the blast furnace operating rate of 247 steel plants was 83.85%, which was a decrease of 0.13% from last week and a year-on-year increase of 6.25%; the utilization rate of blast furnace ironmaking capacity was 92.28%, which was an increase of 0.10% from the previous month and 12.22% year-on-year; The profit rate of the plant was 85.71%, a month-on-month increase of 8.66% and a year-on-year decrease of 2.16%; the average daily molten iron output was 2.4563 million tons, an increase of 2,500 tons from the previous month and an increase of 325,200 tons year-on-year.

3. Mysteel: According to foreign media reports, Surefire Resource is planning to promote the Perenjori magnetite project in Western Australia. The mine has reserves of 192 million tons of iron ore with an iron grade of more than 36%. The company claims that 70% of the fine powder resources of iron products can be produced through beneficiation.

【Trading strategy】

1. Last week’s 45 port iron ore inventory was 126 million tons, a month-on-month decrease of about 620,000 tons. Among them, Australia’s mines were plentiful and Brazil’s mines were down. In terms of varieties, the ball inventory continued to decline, mainly due to the tight availability of resources recently. The shipment of Australia and Pakistan is expected to show a downward trend after the impulse of the previous period, and the arrival volume in the later period might increase. The overall global iron ore shipments in February are expected to be significantly reduced compared with January. On the demand side, the output of molten iron from 247 companies increased by 2.5 to 2456.3 thousand tons, and the operating rate of blast furnaces dropped slightly. At present, steel mills have average replenishment efforts, and demand for downstream finished products is acceptable. The speed of threaded hot coil storage has slowed down. However, due to the convening of the "Two Sessions", restrictions have gradually become stricter in Hebei. At the same time, the inventory of traders has not changed much compared with the same period. The willingness to replenish the library is not strong, and mostly wait and see. The strength of the later demand needs further verification. In the case of no significant increase in iron ore on the supply side, in the medium and long term, it is still suitable as a long-term configuration in the black series. In the short term, the market is expected to fluctuate. Strategically, it is recommended to close positions or hold the current position before the meeting.

2. Arbitrage: All iron ore exits after the 5/9 is pulled up.

(For reference only)

PTA
PTA: The cost of PX is rising, and polyester resumes work quickly, boosting TA to continue to rise

TA maintenance plans are concentrated in March-April. For the first time, a small de-stocking is expected, and TA processing fees are expected to bottom out; however, PX de-stocking will accelerate in February, and there will be no pressure on warehouses in March-April, and PX processing fees will rise more elastically. PTA continues to increase in cost.

Strategic recommendations: (1) Unilateral: Tend to hold the long position, but be cautious. (2) Cross period: hold the current position.

Risks: The implementation of the PTA plant maintenance plan from March to April, and the continued improvement of the supply and demand of aromatics due to the gasoline premium.

Natural Rubber
Rubber: the current price gap continues to widen, waiting for demand to rebound

Last week, the price of rubber rose first and then fell. In the first half of the week, under the expectation of increasing inflation in overseas markets and economic recovery, the price performance was strong. On Friday, the price was suppressed due to the macro shift.

Last week, the spot median price shifted and the rhythm generally followed the price of the futures. According to Zhuochuang’s understanding, Thailand’s main production areas have entered a low-production stage, while the country is currently in a shutdown period, and the release of new rubber is sluggish; while the pace of recovery of domestic terminal demand has accelerated, and some terminal companies with low inventory reserves a year ago are partly in a bullish atmosphere. Appropriate replenishment operations have been initiated, and downstream companies have actively resumed work, supporting the overall increase in demand for natural rubber; driving the spot market price center to rise significantly. At present, most large factories have sufficient stocks of raw materials, and they are not in a hurry to buy when the market is soaring. Some small businesses are considering moderate replenishment due to insufficient inventory and rapid resumption of work after the year. From the traders' understanding, the overall transaction volume has not yet increased after the holiday, especially the purchases from downstream factories are not much. If prices continue to rise, market buying will gradually increase. The global natural rubber has entered a low-yield season, and the purchase price of raw materials has continued to rise, supporting the U.S. dollar market. In addition, the market of “Shanghai Rubber” has been rising strongly due to the sentiment of external funds. Properly start the procurement operation under the market conditions, and the center of gravity of the U.S. dollar market has moved upward. As of last weekend, rubber premium synthetic rubber was 1,575 yuan/ton (-375). Driven by the strong crude oil, the price of synthetic rubber continued to rise last week, which narrowed the spread.

In terms of downstream tire operating rate, as of February 25, the operating rate of all-steel tire companies was 58.73% (+41.49%), and the operating rate of semi-steel tire companies was 54.66% (+34.8%). The operating rate has basically returned to a normal level, and the operating rate is expected to rise further next week.

Opinion: Last week, the price of glue ushered in a callback after the rapid rise. In the short term, we need to pay attention to the opening situation of the main domestic production areas starting in mid-March. Once the amount of glue released is sufficient, the current higher futures price difference will make the disk hedging. The pressure has increased. As the market atmosphere tends to be rational, it is expected that the short-term rubber prices will enter shocks. From a fundamental point of view, the period of low global supply will continue into April-May, during which the overall supply increase will be limited, while domestic demand has steadily recovered, and overseas vaccine-based listings will also slowly recover. The overall demand growth momentum will remain unchanged, and the mid-line supply and demand Still tight, it is recommended to maintain a long mindset. Short-term wait for buying opportunities after the price stabilizes.

Strategy: Tend to hold long the position, but be cautious.

Risk points: 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

Last Friday, LME copper recovered and closed at 9,000 US dollars/ton, down by 355 US dollars/ton, or down by 3.79%, and decreased by 2828 lots to 340,000 lots.

【Important Information】

1. The US House of Representatives approved Biden's $1.9 trillion epidemic relief plan. The plan covers a $1,400 economic stimulus check, enhanced unemployment benefits, and new funds for vaccines and testing.

2. According to the SMM survey, the operating rate of wire and cable companies in February 2021 was 41.91%, a decrease of 32.91 percentage points from the previous month and an increase of 7.23 percentage points from the same period last year. Among them, the operating rate of large enterprises was 45.26%, the operating rate of medium-sized enterprises was 28.76%, and the operating rate of small enterprises was 32.63%. The operating rate of wire and cable companies is expected to be 68.72% in March.

【Trading strategy】

1. Last Friday, U.S. Treasury yields rose and LME copper recovered from a high level. Over the weekend, the US House of Representatives passed Biden's 1.9 trillion stimulus policy, which is conducive to boosting market risk sentiment. However, it needs to be corrected after the copper price rises sharply, and the copper price may enter a state of adjustment in the short term.

2. Arbitrage: The waves in Chile have eased recently. Calculating the 1-2 month shipping schedule, copper concentrate and imported copper will return to normal at the end of March and early April. The supply-side interference will gradually slow down, and the arbitrage market will temporarily wait and see.

3. Options: hold the current position

(For reference only)