Crude oil

Crude oil: EIA crude oil inventories decrease, refined oil inventories increase

Recently, oil prices have fluctuated, and the forward curve is flatter than a month ago, and the monthly difference has dropped significantly. The change in the forward curve is not a change in the future balance sheet, but a negative feedback between the forward curve and the inventory structure. Prior to this, the premium in recent months has been strong, driving the active inventory of the industry to go away. The new inventory has led to an increase in short-term supply and the spot market is weak. However, as the supply and demand gap continues to enlarge, this part of the inventory will gradually be digested, so the future forward curve will become steep again in the future. Although OPEC has decided to increase production, the gap between supply and demand on the balance sheet will still be enlarged in the future. At the same time, although the epidemic has disrupted the demand recovery, the demand recovery will be sooner or later.

Strategy: Neutral

Risk: No

Iron Ore

Iron Ore

The position on I2105 contract closed at ¥1113per ton, i2109 closed at ¥978.5 per ton, the spread of Iron 5-9 contract is 134.5 yuan.

In terms of spot, the PB powder in Rizhao Port was ¥1,136 per ton, the discounted SSF price was ¥1170 per ton.

【Important News】

1. Mysteel: The new caliber Australia and Brazil iron ore shipped 24.041 million tons, a decrease of 4.035 million tons from the previous month; Australia’s total shipment was 18.109 million tons, a decrease of 3.475 million tons from the previous month; of which, Australia sent 15.382 million tons to China, a decrease from the previous month. 1.875 million tons; Brazil’s total shipment volume was 5.932 million tons, a month-on-month decrease of 560 thousand tons. The total global shipment volume was 31.089 million tons, a decrease of 4.077 million tons from the previous month.

2. Esteel: This week (20210401-20210407), the inventory of six northern ports totaled 74,574,800 tons, an increase of 482,200 tons from the previous month. Trade mines accounted for 72.28% and non-trade mines accounted for 27.72%.

【Trading Strategy】

1. Since the beginning of the year, iron ore port inventories have continued to accumulate. Under the Ministry of Industry and Information Technology's policy of reducing crude steel output, molten iron production has been suppressed; however, for finished products, the current demand is strong, and the transaction and delivery of building materials have remained stable, and prices keep climbing. Production profits of steel mills have continued to widen. At this stage, the prices of raw materials are mainly driven by finished products. For iron ore, on the supply side, as Australia and Pakistan step out of the rainy season hurricanes, seasonal resistance to shipments will decrease. It is expected that shipments in April will remain at a relatively high level, and there may be a slight increase in domestic arrivals; on the demand side, molten iron production is likely to drop. Difficult to increase, the impact of Tangshan's emission reduction and production restriction on demand will continue, and it may spread to the whole country, and the upward space of molten iron production is limited. Due to the increasing uncertainty of the steel mills in the periodical production restriction, the willingness to reduce the inventory is strong, and it is difficult for the port to increase significantly. The port arrivals are expected to increase slightly in the later period, and the port inventory may continue to accumulate. Under the competition between the two parties' forces of administrative restriction on production and the growth of materials, the price of iron ore is expected to fluctuate mainly in the short term.

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

(For reference only)

PTA

PTA: Concentrated overhauls, PTA processing costs further increase

Balance sheet outlook: TA maintenance is still concentrated in April, and it is expected to continue to be de-stocked. 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: Arrivals have decreased, and port inventories have continued to fall

On April 7st, the most active traded RU contract closed at 14,315 (0) yuan/ton, the price of mixed rubber was 12,400 (-50) yuan/ton, the basis of most active traded contract was -590 yuan/ton (+25); the open interest of top 20 active traded long positions was 80612 (+3866) lots and the short position was 118225(+4984), net short position was 37613(+1118).

On April 7st, the most active traded NR contract closed at 11,225(+5) yuan/ton, the STR in Qingdao Free Trade Zone was 1,720 (0) US dollars/ton, the SMR was 1,705 (+10) US dollars/ton, and the SIR was 1670 (-5) US dollars/ton. The basis of most active traded contract was -306 (-62) yuan/ton.

As of Apr 2nd, the total inventory of the exchange was 176,806 (+904) lots, and the warehouse receipts of exchange were 171,960 (+1040) lots.

Raw materials: sheet rubber 60.98 (0), cup lump 44.2 (0), latex 60.2(0), RSS3 63.75 (+0.05).

As of Apr 1st, the domestic all-steel tire operating rate was 78.17% (+0.14%), and the domestic semi-steel tire operating rate was 74.17% (+0.81%).

Opinion: The price of futures remained within a narrow range yesterday. The latest port inventory maintains a downward trend, mainly due to the recent decrease in port arrivals. At the time of domestic delivery, the main producing areas in Yunnan ushered in rain, which eased the previous drought concerns, and the supply side is expected to rebound from the previous month. The demand is fair. Domestic heavy-duty trucks continued to pick up in March, mainly due to the approaching downstream peak season and the upcoming national VI emission regulations for heavy-duty diesel vehicles that will be fully enforced from July 1 this year. This will bring a significant increase in demand for updates. Heavy trucks are expected in the first half of this year. Sales will perform well. Due to the increase in output brought about by domestic delivery, the delivery pressure of Shanghai Rubber 05 contract has appeared. If the domestic production volume is increased in the later period, the disk will still be under pressure. The downstream demand is acceptable. It is recommended to hold the current position for the time being and wait 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$8930/ton, down by US$110/ton, a decrease of 1.22%, and increased 1431 lots to 30,7000 lots.

【Important News】

1. The minutes of the Fed's March policy meeting show that it will take some time before the debt purchase plan is reduced. Chairman Powell mentioned that money market interest rates may face downward pressure. He said that it may be appropriate to adjust the excess reserve interest rate (IOER) and the overnight reverse repurchase interest rate at the upcoming meeting or even between the two meetings. Dallas Fed President Kaplan predicts that the economy will rebound strongly this year, and the inflation rate may far exceed 2.5%, then fall back; Chicago Fed President Evans said that he is even happy to see the inflation rate reach 3% within a period of time.

2. The U.S. Department of the Treasury elaborated on the tax proposals in President Biden's $2.25 trillion economic plan, saying that through these changes, approximately $2 trillion in corporate profits will be brought back to the U.S. tax network within ten years. Among them, measures designed to make companies no longer have the incentive to transfer profits overseas will bring about $700 billion in federal revenue. This tax reform will bring about 2.5 trillion US dollars in additional taxes in 15 years, which can support Biden's goal to invest in infrastructure, green investment and social welfare.

【Trading Strategy】

1. The minutes of the Fed's policy meeting overnight emphasized the need to continue easing. The recent increase in mine-side interference, Chile's border blockade will not affect the production of copper concentrates for the time being, but it will affect the delivery of raw materials and increase the tension in the spot market. Near the peak consumption season, the current copper inventory is still at a low level over the years, and the downstream raw material inventory is also low. More importantly, in an environment where funds are still relatively loose, the market is more willing to believe the story of bulls. It is difficult for the copper price to show a trend downward trend for the time being, and it is temporarily kept fluctuating within the range.

2. Arbitrage: At present, copper consumption has not fully recovered, and orders for real estate and infrastructure construction are relatively weak. High copper prices have also restrained some copper consumption. The supply of copper scrap is abundant, and the downstream favors copper scrap is relatively strong. Copper is still in the warehouse stage, and the peak season may not arrive until mid-April. The arbitrage is temporarily to hold the current position.

3. Option: continue to hold the put option, that is, sell CU2105-P-60000

(For reference only)