Crude oil

Crude oil: The limited production alliance increased production less than expected, and oil prices soared

The results of the OPEC meeting yesterday exceeded market expectations. Except for Russia and Kazakhstan, which are allowed to increase production by about 150,000 barrels per day, other countries will maintain the scale of production cuts in April. At the same time, Saudi Arabia will extend its voluntary production cut of 1 million barrels per day to In April, before the meeting, the market generally expected OPEC to increase production by about 1.5 million barrels per day. Judging from the results of the meeting, most of the member states of the limited production alliance still hope that oil prices will rise further to increase fiscal revenue. OPEC tends to increase short-term income, which is relatively consistent with our previous views. OPEC or Saudi Arabia’s tolerance for oil prices may be between 75 and 80 US dollars per barrel. In the future, the release of OPEC’s remaining capacity will also be gradual. In addition, we believe that more attention is needed in near future. It is the risk of Iranian oil returning to the market. Recently Iran has frequent contacts with Asian refineries. Some refineries have begun to prepare in advance for Iranian oil’s return to the market. If Iranian oil returns to the market before June, it will have a greater impact on oil prices

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

Risk: Iranian oil returns to the market early

Iron Ore

Iron Ore:

The price of iron ore futures decreased, the position on I2105 contract closed at ¥1136 per ton, the spread of Iron 5-9 contract is 121. In terms of spot, the PB powder in Rizhao Port was ¥1,178 per ton, the discounted SSF price was ¥1230 per ton.

【Important News】

1. Mysteel: Global iron ore production is expected to maintain a strong growth rate in 2021, with a year-on-year increase of 130 million tons to 2.35 billion tons, the highest annual output since statistics are available. The increase mainly comes from two aspects: mines that have stopped production due to the epidemic or force majeure accidents have resumed production one after another, accounting for 78% of the increase; new projects are put into the market under high ore prices, and the estimated contribution is about 28 million tons.

2. Mysteel: From January to February, China exported 10.140 million tons of steel products, a year-on-year increase of 29.9%; cumulative imported steel products were 2.395 million tons, a year-on-year increase of 17.4%; cumulative imports of iron ore and concentrates were 181.506 million tons, a year-on-year increase of 2.8 %.

【Trading strategy】

1. At present, the iron ore inventory of 45 ports is 12789 million tons, an increase of about 1.45 million tons from the previous month. Except for the reduction of lump ore, the rest have increased, and there is a large increase in coarse powder. Arrivals to Hong Kong are at a high level, and overall shipments to Australia and Pakistan have risen steadily, with a slight decrease this week. On the demand side, the output of 247 hot metal decreased by 6,100 tons to 2.4502 million tons, and the operating rate of blast furnaces dropped slightly. The maintenance of blast furnaces was mainly concentrated in South China and West China; A decrease of 235,000 tons. Under the expectation of "carbon peak" and "carbon neutrality", steel mills' profits have recently broadened. In the short term, the market is expected to fluctuate, and the strategy is mainly to wait and see; in the medium and long term, iron ore is still suitable as a long-term configuration in the black system when there is no significant increase in the supply side.

2. Arbitrage: 5/9 forward hedging, long iron ore and short coke

3. Option: Sell I2105-c-1320

PTA

PTA: Crude oil continues to rise, driving PTA costs to 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, and TA processing fees are expected to bottom out; however, PX will be slightly accumulated in March-April, and PX processing fees may fluctuate under the background of over-increasing in the previous period.

Strategic recommendations: (1) Unilateral: cautiously bullish. (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: 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.

As of February 26, the total inventory of domestic exchanges was 174,846 tons (+100), and the amount of futures warehouse receipts was 167,940 tons (0). At this moment, domestic production is completely stopped, and overseas rubber tapping has entered the off-season. The overall warehouse receipt increase is limited and continuous Basically the same for a few weeks. As of February 14, inventory in Qingdao Free Trade Zone continued to rebound slightly, mainly due to fact that demand has not yet fully recovered, and the overall trend of seasonal accumulation.

Affected by futures prices, spot prices fell mainly last week. According to Zhuochuang's understanding, due to good domestic phenological conditions, Yunnan production areas will take the lead in trial cutting around the 20th, and Hainan will start trial cutting early next month. Since the current price is in the high operating range in the past two years, the willingness of rubber farmers in the production areas to tap rubber is still acceptable, and it is expected that the new rubber will be opened earlier than in previous years. The price of U.S. dollar rubber in Qingdao Free Trade Zone fell, but the average price rose from last week. From the perspective of market transactions, transactions between traders are the mainstream, and downstream factories maintain just-need purchases. As the high price of the market fell back, the market delivered a positive offer, and the transaction volume also increased. The average price of the external market has moved up from last week as a whole. The continued decline in the prices of Shanghai latex and Singapore has led to the dumping of raw materials by the local second market in Thailand, resulting in a sharp drop in the price of latex. Affected by this, the price of US dollars has fallen; as the terminal factory replenishes the stock. Last week, the enthusiasm for US dollar cargo orders cooled down, and factories were mainly waiting and watching. As of last weekend, the rubber premium was 250 yuan/ton (-1325) for synthetic rubber. Driven by the strong crude oil, the price of synthetic rubber rose significantly last week, resulting in further narrowing of the price difference.

In terms of downstream tire operating rate, as of March 4, the operating rate of all-steel tire companies was 75.12% (+16.39%), and the operating rate of semi-steel tire companies was 72.26% (+17.6%). The operating rate has basically returned to a normal level, and the operating rate is expected to rise further next week.

Opinion: After the rapid price drop in the first two weeks, the valuation has been restored to a certain extent. As the price of raw materials in Thailand's main producing areas stabilizes, the price of rubber has also begun to stop falling. What needs attention next week is the weather and other conditions in the main domestic production areas. At present, the overall phenological conditions of the domestic production areas are good, and it is expected that the opening will be normal. Under the stimulus of high prices, some early opening is not ruled out. Once the amount of glue released is sufficient, the current higher futures price difference will increase the hedging pressure on the disk. In the mid-term perspective, the period of low global supply will continue into April-May, during which the overall supply increase is limited, while domestic demand is steadily recovering, and overseas vaccine-based listings will also slowly recover. The overall demand growth momentum will not change, and the mid-line supply and demand will remain Too tight, it is recommended to maintain a long mindset. However, it is not recommended to chase gains, and to buy in callbacks.

Strategy: Tend to long position, but be cautious.

Risk points: Increased supply has brought stocks back up sharply, the epidemic and other impacts, demand continues to weaken, and funds are tight.

Copper

Copper

Last Friday, LME copper rebounded and closed at US$8977/ton, up by US$388/ton, an increase of 4.52%, and lightened 597 lots to 329,000 lots.

【Important Information】

1. 【SMM analysis: unwrought copper and copper materials in January-February increased slightly year-on-year in March or released more increases due to shipping delays】 According to data released by the General Administration of Customs, China's imports from January to February 2020 Unwrought copper and copper materials were 88.4 tons, an increase of 4.7% year-on-year. It is estimated that the volume of electrolytic copper in January-February will reach 610,000 tons, a cumulative year-on-year increase of about 6%; The average monthly import volume is about 305,000 tons, which is not much different from the month-on-month import volume in December 2020.

2. The U.S. Senate passed Biden's $1.9 trillion bailout bill, and the majority leader of the House of Representatives said Tuesday that it will vote on the revised Senate bill. Although some radical members of the House of Representatives are dissatisfied with the amendment, so far no one has threatened to vote against it.</span> </p> <p class="MsoNormal" align="left" style="font-size:10.5pt;font-family:DengXian;"> <span> </span> </p> <p class="MsoNormal" style="text-align:justify;font-size:10.5pt;font-family:DengXian;"> 【<span>Trading strategy</span>】<span></span> </p> <p class="MsoNormal" style="text-align:justify;font-size:10.5pt;font-family:DengXian;"> <span>1. The US Senate passed Biden's $1.9 trillion rescue plan on Sunday, which may boost market risk sentiment today, and copper prices will rebound in stages. However, LMC has just experienced a sharp rise recently, and the market may be dominated by shocks recently.

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 hold the current position.

3. Options: hold the current position.

(For reference only)