Crude oil

Crude oil: API crude oil inventories increased, refined oil inventories fell sharply

Yesterday API released inventory data. Among them, crude oil inventories increased more than expected, and refined oil inventories fell sharply. This data is still affected by the cold wave. However, it is worth noting that total oil inventories are still falling sharply. At present, US commercial crude oil inventories have returned to Near the 5-year average level, refined oil inventories are relatively high in history. The shutdown of refineries brought about by this cold wave will help to remove US refined oil inventories, but the medium term still depends on the recovery of demand. On the other hand, from the perspective of OPEC crude oil exports last month, compared with January’s OPEC exports increased by about 750,000 barrels per day, some countries may have the possibility of cheating and overproduction, such as Iraq, Nigeria and Kazakhstan. There is a certain degree of uncertainty about the future production limit alliance meeting, but we currently believe that the benchmark expectation that OPEC will still decide at this meeting to increase production by about 1.5 million barrels per day from April.

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 increases production beyond expectations

Iron Ore
Iron Ore

The price of iron ore futures increased, the position on I2105 contract closed at ¥1147.0 per ton, the spread of Iron 5-9 contract is 127. In terms of spot, the PB powder in Rizhao Port was ¥1,170 per ton, the discounted SSF price was ¥1228 per ton.

【Important News】

1. Mysteel: The new caliber Australian and Brazilian iron ore shipped totaled 24.07 million tons, an increase of 1.493 million tons from the previous month; the total shipped from Australia was 18 million tons, an increase of 1.06 million tons from the previous month; of which 14.565 million tons were shipped from Australia to China, an increase from the previous month 21,000 tons; Brazil’s total shipment was 6.072 million tons, an increase of 433,000 tons from the previous month. The global shipping volume was 32.131 million tons, an increase of 3.104 million tons from the previous month.

2. Mysteel: With February 28, 2021 as the latest time node, Mysteel predicts that the global iron ore output in 2020 will be approximately 2.221 billion tons. It is expected to maintain a strong growth rate in 2021, with an increase of 130 million tons to 2.35 billion tons year-on-year.

【Trading strategy】

1. At present, the iron ore inventory of 45 ports is 126 million tons, a decrease of about 620,000 tons from the previous month. Among them, the Australian mines are accumulating and the Brazilian mines are decreasing; in terms of varieties, the coarse powder continues to accumulate, and the pellets are decreasing. This week, the arrivals to the port rebounded slightly as expected, and the subsequent reduction is expected; the global iron ore shipments in February decreased overall compared with January. There are overhauls in Australian ports this week, and the estimated impact is about 900,000 tons, which is unknown in Brazil. On the demand side, the output of molten iron from 247 companies increased by 2,500 to 2,456,300 tons, and the operating rate of blast furnaces dropped slightly. At present, the inventory level in steel mills is higher than that of the same period. The rigid replenishment is not as strong as expected. The downstream material accumulation has slowed down. Affected by the convening of the "two sessions", restrictions in Hebei have gradually become stricter, and port traffic has dropped significantly. Ports restrict port dredging, demand capacity is limited, and the recovery of terminal demand remains to be seen. In the case of no significant increase in iron ore on the supply side, it is still suitable to hold the long position in the black system in the medium and long term. In the short term, the market is expected to fluctuate. Strategically, it is recommended to hold the current position.

(For reference only)

2. Arbitrage: close the long position of iron ore and the short position of coke in the early stage

PTA
PTA: Crude oil drove PTA to fall sharply, and PTA and PX processing cost rose rapidly in the context of the early rise

Balance sheet outlook: TA maintenance plans are concentrated in March-April, and TA processing fees are expected to bottom out for the first time. TA processing fees are expected to bottom out; however, PX March-April will be slightly accumulated, and PX processing fees may fluctuate in the context of the previous over-increasing

Strategic recommendations: (1) Unilateral: hold the current position, over-rise callback, temporarily hold the current position (2) Intertemporal: 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: Waiting for demand to follow up, port inventory rebounds slightly

On Mar 2, the most active traded RU contract closed at 15,445 (-450) yuan/ton, the price of mixed rubber was 12,550 (-250) yuan/ton, the basis of most active traded contract was -670 yuan/ton (-250); the open interest of top 20 active traded long positions was 81,635 (-6787) lots and the short position was 126605 (-6779), net short position was 44,970 (+8).

On Mar 2, the most active traded NR contract closed at 11,630 (-320) yuan/ton, the STR in Qingdao Free Trade Zone was 1,800 (-45) US dollars/ton, the SMR was 1,770 (-25) US dollars/ton, and the SIR was 1,705 (-30) US dollars/ton. The basis of most active traded contract was -611 (+104) yuan/ton.

As of Feb 26 the total inventory of the exchange was 174,846 (+100) lots, and the warehouse receipts of exchange were 167,940 (0) lots.

Raw materials: sheet rubber 61.2 (-1.9), cup lump 43 (-1.3), latex 59.5 (-2), RSS3 66.01 (0).

As of Feb 25, the domestic all-steel tire operating rate was 58.73% (+41.49%), and the domestic semi-steel tire operating rate was 54.66% (+34.80%).

Opinion: As market sentiment becomes more rational, rubber prices are also repairing the sharply widening of the current price gap brought about by the rapid increase in the early period and the continuous increase in raw material prices in Thailand's main producing areas. At present, the price difference between latex and cup lump in Thailand's main production areas has been repaired, but it is still at a high level year-on-year. The absolute prices of raw materials including latex and cup lump are also at a relatively high level year-on-year, indicating that the valuation is still not low. Domestic demand is still recovering, and port inventory shows seasonal accumulation. From a mid-line perspective, the global low-yield period will continue into April and May, and demand at home and abroad is showing a gradual recovery momentum, especially overseas, there is an expectation of demand recovery after the epidemic. The good supply and demand pattern may make the space under the rubber price limited, waiting for the price to stabilize.

Strategy: Neutral

Risks: a substantial increase in production, continued accumulation of inventory, and a substantial decrease in demand, etc.

Copper

LME copper rebounded yesterday, closing at 9269.5 US dollars/ton, up by 238.5 US dollars/ton, or 2.64%, reducing its position by 2105 lots to 331,000 lots.

【Important Information】

1. 【State Grid Corporation of China released the "Carbon Peak and Carbon Neutrality" action plan】 State Grid Corporation firmly established the concept of "energy transition and green development", accelerated the development of power grids, increased technological innovation, and promoted energy and power from high-carbon to low-carbon Carbon, shift from fossil energy to clean energy, accelerate the formation of green production and consumption methods, and contribute to the construction of ecological civilization and sustainable development.

2. The US Senate Majority Leader Schumer stated that the Senate will begin work on anti-epidemic relief proposals as early as Wednesday. In addition, 10 Democratic senators called for the re-distribution of money to individuals to include the epidemic subsidy check into Biden's long-term economic plan.

【Trading strategy】

1. Yesterday, the US Senate stated that the anti-epidemic relief proposal would be started on Wednesday as early as Wednesday. Coupled with the impact of the fall in the US dollar index, the copper price bottomed out to near the 10-day moving average and found support. However, the price of copper has just experienced a surge and there is a need for adjustment, and it may enter a state of shock 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 position is suggested to hold the current position.

3. Options: hold the current position.

(For reference only)