Iron ore: The Iron and Steel Association voiced that the ore price was too high, and the four major mines continued to increase shipments
Opinion and logic:
Yesterday, the open interest of iron ore 2109 contract shrank and fluctuated at high price level all day, finally closing at 1,158.5 yuan/ton, an increase of 1.89% or 14 points, and decreasing by 28,300 lots. Qingdao Port PB fine reported 1,306 yuan / ton, up 8 yuan / ton, and discounted with 1,447 yuan / ton, the main contract basis was 289. SSF reported 1,015 yuan / ton, increased by 5 yuan / ton, with discounts of 1,273 yuan / ton and basis of 114. In recent months, it has been in a flat or slightly premium state. Port spot transactions were 1.26 million tons, a decrease of 190,000 tons from the previous week. The price difference between high and low quality products widened by 3 yuan/ton to 291 yuan/ton, continuing to record highs.
Yesterday, the Iron and Steel Association once again made it clear that the steel industry must take effective measures to increase the development and mining of iron ore at home and abroad, improve the resource protection capacity of the steel industry, and curb the rising trend of iron ore prices. It can be seen from it that the current effective way to curb the sharp rise in iron ore prices is to increase supply, but it is still more difficult to see obvious results in a short period of time, and it is more of a longer-term plan.
In terms of shipping, Australia and Brazil shipped 24.732 million tons of iron ore, an increase of 655,000 tons from the previous week. Australia’s total shipment was 19.48 million tons, an increase of 2.537 million tons from the previous week; of which 14.93 million tons were shipped from Australia to China, an increase of 1.411 million tons from the previous week. Shipments that departed Brazilian ports were estimated to drop 1.882 million tons week on week to 5.252 million tons. The total global shipment was 32.374 million tons, an increase of 1.61 million tons from the previous week. Shipments have increased for two consecutive weeks, but the proportion of shipments to China has decreased.
In addition, as the May Day long holiday approaches, steel mills also have certain replenishment expectations. Therefore, both futures and spot prices of ore have performed relatively strongly in the near future.
In general, the current long-term and short-term logic of iron ore is slightly different. In the short term, due to the improvement of overseas epidemic situation and the resumption of production in various regions, as well as the domestic steel products have skyrocketed, steel consumption continues to improve, resulting in steel mills’ high profits. The market sentiment of the iron ore is more optimistic, and coupled with the discount repair, the iron ore still fluctuates strongly in the short term. However, in the long run, under the background of carbon neutrality and carbon peaks, the policies of restricting production and suppressing production in various regions are like a spark, and gradually showing a prairie fire. Production restriction will still be the core logic of this year's transaction, and the key to later price trends will lie in the scope and extent of domestic production limitation. If production restrictions are no longer expanded, the supply and demand of iron ore will generally be slightly surplus. Once the scope of suppressed production is expanded, iron ore will enter a state of surplus, and steel mill profits are expected to continue to expand. In the future, more attention should be paid to changes in the policy level, a long-term bearish view should be held, and someone can unilaterally carry out short operations when the price is high. The short position orders needs to be adjusted or avoided the strong rebound caused by the repair of the discount after the discount is too large in accordance with market expectations, and it can also go long position of thread or hot coil by comparing the prices, or choose to buy at out-of-value far-month put options.
Unilateral: neutrally hold the current position in the short-term, and neutrally hold the view of long-term bearish
Inter-period: go long position of thread or hot-rolled coil and short position of iron ore
cross-species: go long position of thread or hot-rolled coil and short position of iron ore
Spot-Futures Arbitrage: None
Options: buy at out-of-value 09 put options
Concerns and risks: The intensity of production restriction and suppression at the finished product end is not as good as expected, the demand for finished product end is strong, and overseas pig iron production has exceeded expectations by a large margin.
Rubber: port arrivals are limited, and port inventory continues to decline
On April 27, the most active traded RU contract closed at 13,810 (0) yuan/ton, the price of mixed rubber was 12,050 (0) yuan/ton, the basis of most active traded contract was -485 yuan/ton (-450); the open interest of top 20 active traded long positions was 104,079 (+1,549) lots and the short position was 156,685 (+4,587), net short position was 52,606 (+3,038).
On April 27, the most active traded NR contract closed at 10,970 (-35) yuan/ton, the STR in Qingdao Free Trade Zone was 1,695 (0) US dollars/ton, the SMR was 1,675 (0) US dollars/ton, and the SIR was 1,645 (0) US dollars/ton. The basis of most active traded contract was -370 (-49) yuan/ton.
As of April 23: the total inventory of the exchange was 177,542 (-60) lots, and the warehouse receipts of exchange were 174,080 (-60) lots.
Raw materials: sheet rubber 58.69 (-2.43), cup lump 44 (+0.1), latex 59.5 (+0.5), RSS3 63.55 (+0.78).
As of April 22, the domestic all-steel tire operating rate was 75.65% (-0.36%), and the domestic semi-steel tire operating rate was 72.34% (-0.47%).
Opinion: Yesterday, the rubber futures price declined first and then rose, and the price did not change much from the previous day. At the beginning of the delivery, the raw material output in Thailand was limited, and the raw material prices rebounded slightly in the past two days. At present, there is a pattern of weak supply and demand of rubber. On the one hand, the operating rate of domestic tire factories has declined for two consecutive weeks, mainly due to the weak domestic replacement market and the slowdown in exports, which has brought tire factory inventory pressure to appear, and short-term raw material purchase demand may decline. In addition, due to the early stage of delivery at home and abroad, and the rubber trees in the Banna area of Yunnan are affected by powdery mildew, the delivery will be delayed until the middle of next month, resulting in limited output increase, and continuous decline of domestic port inventories. Under the support of cost, it is expected that the downward pressure for the rubber price is limited.
Risks: a substantial increase in production, continued accumulation of inventory, and a substantial decrease in demand, etc.
Crude oil: OPEC maintains its original production increase plan unchanged
Oil prices rebounded slightly yesterday. Generally speaking, there are two positive factors. First, yesterday OPEC decided to maintain its previous production increase plan. Despite the recent severe epidemic situation in India, OPEC still has confidence in the growth of global demand. On the other hand, BP company said that China's oil demand has exceeded the level before the epidemic. The current market focus is still on the pace of demand recovery. We believe that as long as there is no black swan for vaccination and no global lockdown, the demand low has passed. Looking forward, the demand recovery will still be relatively certain. However, affected by the epidemic, the recovery of global demand may show differences in magnitude and speed.
1. 单边：谨慎看多 2. 跨市：内外盘反套 3. 跨期：暂缓；4. 期权：卖出看跌
1. 美联储货币政策导向 2.美元指数走势 3. 2季度需求是否能达预期
Copper: Copper prices still maintain a strong pattern
Spot market: According to SMM news, yesterday's market once again rose to around 72,000 yuan/ton, further inhibiting the activity of the domestic spot market. The quotation of flat copper in the morning market started at a discount of 230 yuan/ton, and buying side continued to hold the current position. Some holders adjusted the price to a discount of 250-240 yuan/ton. Trade buying orders are still reluctant to receive goods. Under the premise of lack of people to receive the goods, the market gradually reported a discount of 270 yuan/ton. Some of the gains were taken back, attracting some traders to buy spot and sell futures while suppressing prices, and transactions gradually appeared. In the second period, some holders were again depressed for their cash-exchange demand when facing high prices, and even heard a slight discount of 280 yuan/ton. The spot market was frightened to high price level and mostly hold the current position, which is in sharp contrast with the popular unilateral futures. The quotations of good copper and wet-process copper are following the trend. In the morning market, good copper can have a discount of 200 yuan/ton for the next month. Brands such as ENM and Jinchuan quickly adjusted their prices to a discount of 230-220 yuan/ton. It is still difficult to see a large number of transactions. As the supply of wet-process copper is still relatively tight, the market as a whole still uses the price of poor copper as a guide, and the price of poor copper into PASAR is mostly at a discount of about 320 yuan/ton. The overall price adjustment is not as good as that of flat copper. The quotation of wet-process copper is discount of 350-320 yuan/ton. However, the downstream fear of high price is serious, also the buyers and sellers have large differences on the price. In the face of the soaring copper price, there are few buyers.
Opinion: Yesterday, copper prices continued to rise, further suppressing domestic spot transactions. Fundamental changes are actually limited. At present, TC prices are still at a low level. Coupled with the fact that the freight rate for the South American to China segment has soared, it may also inhibit the inflow of imported ore to a certain extent. On the demand side, the current low recognition of prices by the downstream causes buyers and sellers to be in a stalemate. However, compared with the traditional peak consumption season in the second quarter, if the copper price shows a correction in the market outlook, the downstream rigid demand for replenishment may increase. In addition, the current US dollar is relatively weak, while crude oil prices are showing a gradual upward trend, which presents a positive transmission to inflation expectations. Therefore, under the current background, copper prices still maintain a strong trend.
In the medium and long term, macroeconomically, there is a high probability that global central banks will continue to maintain the current ultra-loose monetary and fiscal policies, and the U.S. dollar is expected to remain weak. In terms of fundamentals, the CSPT team failed to finalize the floor price of copper concentrate processing fees in the second quarter of 2021, indicating that the market may have certain differences on the future supply of copper concentrate, but it is still hard to say that it is ample. On the demand side, China’s current control of the epidemic is still very successful, and the new energy and new infrastructure sector will continue to drive copper demand. The probability of destocking of the inventories in the next peak season will form a strong support for copper prices. We temporarily maintain the long-term bullish judgment of copper prices. However, if the destocking in the second quarter falls short of expectations, the increase in copper prices may be weaker than previously expected. However, if the destocking in the second quarter falls short of expectations, the increase in copper prices may be weaker than previously expected.
1. Unilateral: cautiously bullish
2. Inter-market: reverse arbitrage of internal and external markets
3. Inter-period: postpone
4. Options: sell and to be bearish
1. Fed's monetary policy orientation
2. Dollar index trend
3. Whether the demand in the second quarter meet expectations
PTA: Yisheng's May contract supply has reduced again, and PTA processing fees have increased rapidly
Balance sheet outlook: In May, the inventory will be stable or continue to be destocked, and we will pay attention to whether there will be more additional maintenance plans announced by Yisheng; however, PX has only a small accumulation in May, focusing on the support for PX from the demand for oil blending.
Strategic recommendations: (1) Unilateral: cautiously bullish, wait-and-see (2) Intertemporal: wait-and-see.
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.