Crude oil

Crude oil: OPEC may maintain production quotas unchanged

OPEC will hold a ministerial meeting on April 1 to discuss the adjustment of production quotas. From the current market expectations, most institutions currently believe that OPEC will not adjust the output quota ceiling at this meeting, and Saudi Arabia will also postpone the increase in production. We believe that the exit of OPEC’s production restriction policy is still gradual, and its complete exit mainly depends on two points. The first is that the increase in oil prices exceeds OPEC’s tolerance limit, which is about 75 to 80 US dollars per barrel. The second is that global inventories have fallen. The normal level before the epidemic has not yet been achieved. Therefore, as long as oil prices are within a tolerable range, OPEC hopes that there will be a gap in supply and demand in the market to absorb excess inventory, and the production restriction policy will not be withdrawn too early.

Strategy: Neutral, none

Iron Ore

Iron ore

The position on I2105 contract closed at ¥1103.5 per ton, the spread of Iron 5-9 contract is 136 yuan.

In terms of spot, the PB powder in Rizhao Port was ¥1,118 per ton, the discounted SSF price was ¥1160 per ton.

【Important News】

1. Mysteel: From March 22-28, Mysteel’s new caliber Australian and Brazilian iron ore shipped 28.076 million tons, an increase of 5.137 million tons from the previous month; Australia’s total shipment was 21.584 million tons, an increase of 4.945 million tons from the previous month; China's volume was 17.257 million tons, a month-on-month increase of 3.792 million tons; Brazil's total shipments were 6.492 million tons, a month-on-month increase of 192,000 tons.

【Trading Strategy】

1. At present, the total iron ore inventory of 45 ports is 130.6 million tons, which is 450,000 tons more than that of the warehouse on a week-on-week basis; the new phase of Australian shipments has increased significantly, and Brazil's shipments have basically maintained. Due to the relaxation of port transshipment restrictions and the gradual improvement in port weather, the average daily port dredging has rebounded significantly, and the average daily iron output also increased slightly. After the profit of the steel plant has increased significantly, the production enthusiasm is strong. This week, 8 blast furnaces are scheduled to resume production and 6 blast furnaces are overhauled. It is expected that the subsequent molten iron output will still increase. At present, terminal demand has returned rapidly, the transaction volume of building materials across the country has accelerated, and the volume of warehouses has been rapid. After the production limit reached expectations, the market mentality gradually stabilized. The market rebounded after a sharp decline; if there is no policy reduction, there is still the possibility of upward repair discounts. However, under the medium and long-term Ministry of Industry and Information Technology's policy of reducing crude steel production, it is difficult for molten iron to increase significantly. In the short term, iron ore itself is not very driven. In the short term, it may follow the fluctuations of steel prices and operate in shock.

2. Arbitrage: long steam coal and short iron ore; long thread or hot coil and short iron ore

(For reference only)

PTA

PTA: TA overhauls increase again, PX Malaysia overhauls

The balance sheet outlook: TA maintenance is still concentrated in April, and TA processing fees are expected to bottom out; however, PX is slightly accumulated in April, and PX processing fees are consolidating.

Strategic recommendations: (1) Unilateral: cautiously bullish. (2) Intertemporal: hold the current position

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

Natural Rubber

Rubber: Rainfall increases, raw material prices rebound slightly

On March 30th, the most active traded RU contract closed at 14,015 (-145) yuan/ton, the price of mixed rubber was 12,400 (-150) yuan/ton, the basis of most active traded contract was -190 yuan/ton (+45); the open interest of top 20 active traded long positions was 53076 (-4154) lots and the short position was 76294(-8367), net short position was 23,218(-4213).

On March 30th, the most active traded NR contract closed at 11,085(-5) yuan/ton, the STR in Qingdao Free Trade Zone was 1,715 (-20) US dollars/ton, the SMR was 1,695 (-30) US dollars/ton, and the SIR was 1660 (0) US dollars/ton. The basis of most active traded contract was -189 (+42) yuan/ton.

As of Mar 26th, the total inventory of the exchange was 175,902 (+900) lots, and the warehouse receipts of exchange were 170,920 (+300) lots.

Raw materials: sheet rubber 61.5 (+0.5), cup lump 44 (0), latex 62.5 (0), RSS3 64.12(+0.92).

As of Mar 25, the domestic all-steel tire operating rate was 78.03% (+0.34%), and the domestic semi-steel tire operating rate was 73.36% (+0.35%).

Opinion: The futures price maintained a weak operation yesterday. Judging from the performance of bulk commodities, except for the black sector, the performance of other sectors was weak. In general, under the high raw material prices, downstream demand was suppressed to a certain extent. In the weak market atmosphere of rubber, downward pressure has appeared. Due to increased rainfall in Thailand's main producing areas, raw material prices rebounded slightly yesterday. Domestic production is sporadic. In the quotation of Hainan raw materials, the price of glue from the Jinnong latex factory is 15,000 yuan/ton, and the price of glue from the dry glue factory is 15,000 yuan/ton. The current RU disk price is basically the same. If the domestic production is increased in the later period, the disk is still under pressure. Downstream demand is acceptable, and it is expected that there will be limited room for further decline, waiting for new drivers.

Strategy: Neutral

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

Copper

Copper

Yesterday, LME copper closed at US$8799/ton, down by US$90/ton, a decrease of 1.01%, and increased 1210 lots to 316,000 lots.

【Important News】

1. Fed Chairman Powell said in an interview with the media on Thursday that the current economic recovery is faster than expected, and "sometime" in the future the Fed will begin to gradually reduce debt purchases. There is a view that Powell is already suggesting that it will reduce debt purchases. Powell said: "As we make greater progress in achieving our goals, we will gradually reduce the number of U.S. Treasury bonds and mortgage-backed securities purchased." Although Powell also emphasized that it is not the time to reduce debt purchases, these remarks Obviously there are some subtle changes from before. In the press conference after the interest rate decision last week, he emphasized more that "this is not the time to start discussing the reduction of debt purchases." This time Powell not only praised the fiscal stimulus and vaccines that have made the economy exceed the economy. Expected growth also emphasizes that debt purchases will be reduced "sometime in the future." The market suspected that Powell was suggesting a reduction in debt purchases, but he could not suddenly speak too clearly so as not to frighten the market.

2. Biden stated that he plans to seek re-election in 2024 and promised to invest more funds than China in innovation and infrastructure, and will not allow China to surpass the United States to become the most powerful country in the world. The U.S. Senate will give priority to promoting legislation on China issues, aimed at improving technological competitiveness and countering China’s influence on the world stage. The bill is scheduled to be passed to the Senate for voting at the earliest next month.

【Trading Strategy】

1. The external market risks have increased recently. The current market expects that the U.S. has monetary policy tightening, U.S. bond yields have rebounded, capital has returned to the U.S., Brazil and other countries passively raise interest rates, emerging market countries have adjusted their stocks, and non-ferrous metals have followed Callback. The current expectation of monetary tightening exists, but the reality of easing remains unchanged. In addition, before the peak consumption season, the current inventory is still at a relatively low level, and the downstream inventory is also low. We believe that the copper price is still in the shock range in the near future to continue to adjust.

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 peak season may not arrive until mid-April, and the arbitrage market will hold the current position for the time being.

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

(For reference only)