Crude oil

Crude oil: Europe's epidemic situation worsens, demand worries rise again

Last Thursday, oil prices fell sharply. From the news, it was mainly due to the re-fermentation of the European epidemic that caused market concerns. The French Prime Minister said that the country is more and more likely to enter the third wave of epidemics. Italy has designated Rome and more than half of the areas as "red areas" and implemented lockdowns. The German disease control agency said that the country is in the third wave of epidemics. In the early days. According to experts, the rapid increase in the number of cases in Central and Eastern European countries may be related to the relaxation of epidemic control and the circulation of the new coronavirus in relevant countries. The French General Administration of Health announced on the 16th that a new variant of the new coronavirus has been discovered, which may evade nucleic acid testing. The French capital Paris will enter a one-month lockdown, and 15 other regions across the country will also implement the same lockdown measures starting at midnight local time on Friday. In addition to France, European countries such as Germany, Italy, Hungary, Poland, and the Czech Republic have also entered a new round of blockade. Italy has implemented a nationwide blockade since March 15 to deal with the impact of the third wave of the epidemic. Germany has decided to extend the new round of blockade to March 28. Hungary also implemented a new round of epidemic prevention and control measures on March 8. Poland announced that it will implement a three-week blockade from March 20. The Czech Republic further tightened its blockade measures on March 1.

We believe that the impact of the third round of the epidemic in Europe lies in: 1. Let the market realize the complexity of the development of the epidemic, and the recovery of demand for crude oil will continue to be ups and downs; 2. The epidemic in Europe may complicate the situation in the United States, which has clearly improved; 3. Demand The pace of recovery will be dragged down, and the pace and magnitude of demand recovery may not be as good as market expectations. However, we believe that this oil price adjustment will improve the current fundamentals. The reasons are: 1. OPEC will be more cautious. It is not ruled out that the upper limit of production quota will be maintained at the April meeting, and Saudi Arabia may also postpone it. Increasing production; 2. Repairing refinery profits after falling oil prices and increasing the willingness of refineries to restock will help China's crude oil buying interest increase; 3. The early "hot futures and cold spot" situation will be improved, and the market spread structure will be more reasonable. In general, although the European epidemic situation has deteriorated significantly and has a significant negative impact on oil prices, we believe that this time is like the oil price drop in November last year. After the mood is released, there is limited room for price drops. In the future, supply and demand will continue to tighten inventory. Under the influence of the decline, the average oil prices will continue to move upward in the future.

Strategy: Neutral, hold the current position for now

Risk: No

Iron Ore

Iron ore

The position on I2105 contract closed at ¥1051 per ton, the spread of Iron 5-9 contract is 168.

In terms of spot, the PB powder in Rizhao Port was ¥1,110 per ton, the discounted SSF price was ¥1180 per ton.

【Important News】

1. mysteel: Recently, the relevant departments of Tangshan City submitted the production and reduction of steel-based enterprises, for this purpose, MySteel followed by the steel enterprises, which had strictly in accordance with the requirements of the blast furnace. And passed by MySteel theory: March 20th - December 31, 2021 affected by about 30.37 million tons, and the annual influence of iron water is about 35.55 million tons. Compared with the actual production ratio of 2020, the estimate decreased by about 11.26 million tons.

【Trading strategy】

1, At present, the iron ore 45 ports’ inventory is 130 million tons, an increase of 138,7000 tons from the previous month. Among them, the Australian mine continued to rise from the low level, while the Brazilian mine continued to fall from the high level; depending on the variety, pellets and fine powder were removed from the warehouse, and the coarse continued The stock of powder remained tired, and the stock of lump ore stopped falling and rebounded. In terms of shipments, the total shipment volume of Australia and Pakistan increased by 1.34 million tons from the previous month, and the overall shipment volume increased steadily. Affected by the increased restrictions on production by air pollution in Hebei, the output of molten iron has dropped by 86,000 tons to 2.32 million tons per day. After the release of the new round of production restriction measures, subsequent reductions in molten iron are expected. This week, the Tangshan area was relieved of heavy pollution. There were more queues for port dredging vehicles, which increased 37,400 tons per day. At present, steel mills are not actively replenishing their warehouses, and they are worried that environmental protection will come again, and most of them adopt the method of picking and using. The demand for hot coils at the finished product end is better, and the reduction is expected, and the extent of thread accumulation is also gradually decreasing. Overall, although iron ore is currently heavily discounted and there is an upward momentum, the main factor in the short term is that the production suspension of steel mills is expected to continue in the later period. The output of molten iron is suppressed and it is difficult to increase significantly in the short term. Ports may Continue to tired library. Strategically, it is recommended to hold the current position unilaterally.

2. Arbitrage: long steam coal and short iron ore.

(For reference only)

PTA

PTA: Processing fees rebounded from oversold, but crude oil drives PTA costs down

Balance sheet outlook: TA maintenance plans are concentrated in March-April, and for the first time, a small de-stocking is expected, and TA processing fees are expected to bottom out; however, PX will be slightly accumulated in March-April, and PX processing fees will consolidate.

Strategic recommendations: (1) Unilateral: 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: Decline in the disk, non-standard spreads narrowed

After the shock of last week, the price of rubber broke down. As US bond yields continued to rise on Thursday night and the wave of Sino-US trade negotiations on Friday, the overall market atmosphere was weak, and the rubber itself was due to the large current price difference and the approaching domestic delivery. Disk arbitrage pressure is relatively high, which brings about price adjustments.

The total inventory of domestic exchanges was 175,002 tons (-160) as of March 19, and the amount of futures warehouse receipts was 170,620 tons (-160). Domestic delivery is approaching, and overseas is in the off-season for tapping. The overall increase in warehouse receipts is limited, and this year's warehouse receipts are year-on-year. Low in the past five years. As of March 14, the inventory in Qingdao Free Trade Zone continued to fall slightly, and the downstream procurement continued to increase. Due to the small overseas production and the high operating rate of domestic tire factories, it is expected that destocking can still be maintained.

The spot price fell mainly last week. According to Zhuochuang’s understanding, the good phenological conditions in the early production areas made the market expected to warm up in advance for delivery. However, it has recently been heard that some areas of Xishuangbanna have suffered from severe powdery mildew, which may cause the opening time to be delayed; Qingdao Free Trade Zone USDG Gum The price is narrowly adjusted. US dollar near-port and spot transactions were good, and far-month cargo was generally traded due to high prices. One is the recent suspension of the delivery period in the production areas, and the prices of raw materials continue to rise; the other is cost support, and the price of cargo is higher than the spot price. In addition, it is heard that foreign tire companies have increased prices to purchase standard rubber from Singapore, which has caused prices to firm up. Mixed trading of USD is more active. The external market price fluctuates strongly. At present, due to the suspension of the delivery period in the production area, the supply of new rubber has basically been suspended. The lack of raw material support has maintained a high overall situation in the US dollar cargo price. However, the domestic terminal buying is affected by the high price, and the overall procurement rhythm is slow. Mainly domestic renminbi mixed purchases, so the overall transaction atmosphere in the US dollar cargo market has a mediocre performance. As of last weekend, the rubber premium for synthetic rubber was -50 yuan/ton (-550), and the price of natural rubber came back, bringing the price difference pattern to reverse.

In terms of downstream tire operating rate, as of March 18, the operating rate of all-steel tire companies was 77.69% (+0.84%), and the operating rate of semi-steel tire companies was 73.01% (+0.41%). The recovery of domestic and overseas demand has brought about a continuous recovery in operating rates, and it is expected that the current operating rates can continue to be maintained until April.

Viewpoint: As the market atmosphere weakened last week, the price of rubber futures broke down. The logic of the current trading or when the domestic market is about to open, the supply increases month-on-month, while the demand remains basically unchanged. The current price gap is still at a high level. The hedging pressure on the disk makes the futures price repair downwards. Without a significant positive pull, it is expected that the basis will continue to be repaired to a reasonable position under this logic, and the price may stop falling. Therefore, the short-term disk may remain weak and wait for new drivers. In the medium term, the period of low global supply will continue into April-May. During this period, the overall supply increase will be limited, while domestic demand will recover steadily, and overseas vaccine-based listings will also slowly recover. The overall demand growth momentum will remain unchanged and domestic destocking It is expected to continue and still support the price.

Strategy: short cautiously in short-term

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

Copper

Last Friday, LME copper closed at US$9066/ton, up by US$68/ton, an increase of 0.76%, and lightened 1388 lots to 312,000 lots.

【Important Information】

1. After the high-level meeting between China and the United States in Anchorage, Alaska, both sides expressed frankly different opinions and signaled that they could not reach any agreement on the road ahead. Xinhua News Agency: China and the United States will strengthen dialogue and cooperation in the field of climate change. After the tit-for-tat Sino-US high-level talks, former Chinese officials believe that there are areas for cooperation between the two countries.

2. According to data from the General Administration of Customs, China imported 531,800 tons of refined copper (refined copper cathodes with an unwrought copper content> 99.9935% and other unwrought refined copper cathodes) from January to February 2021, a cumulative decrease of 9.09 year-on-year %, of which 268,500 tons were imported in January and 263,400 tons in February.

【Trading strategy】

1. The external market risks have increased recently. On the one hand, US bond yields have risen, and on the other hand, the stock market has adjusted from the Alaska meeting. However, the copper price trend is still relatively strong, fluctuating recently, and no trending market has been seen.

2. Arbitrage: At present, copper consumption has not fully recovered. Real estate, infrastructure and other orders are relatively weak. High copper prices have also restrained some copper consumption. The supply of copper scrap is abundant. The downstream favors copper scrap is relatively strong. Copper is still in storage. At this stage, the arbitrage is temporarily waiting to see.

3. Options: sell put options, that is, sell CU2105-P-60000

(For reference only)