FangQuant › Daily Morning

### Daily morning for Crude oil, PTA, natural rubber, iron ore, copper Iro (ZH & EN) 20210607

submitted 2021-06-07 10:21:19

Iron ore: Production restrictions are expected to resume, and prices fluctuate at high levels.

Affected by the relaxation and tightening of steel production restrictions last week, the open interest of iron ore futures first increased and then declined slightly. Last Friday, the iron ore 2109 contract closed at 1,168.5 yuan/ton, an increase of 105.5 yuan/ton on a week-on-week basis, or a weekly increase of 9.92%. In terms of spot, Qingdao Port PB fine reported 1,425 yuan/ton last week, a week-on-week increase of 108 yuan/ton, the discounted price was 1,578 yuan/ton, and the basis of the most-active contract was 409. SSF reported 1,040 yuan/ton, up 74 yuan/ton on a week-on-week basis, with a discount of 1,300 yuan/ton, and the basis of the most-active contract was 132. The Platts 62% index reported US$208.35/ton on the 4th, up US$9.6/ton. In terms of price performance, spot and futures prices have increased more than Platts prices. In terms of transactions, last week’s main iron ore port had an average daily transaction of 1.08 million tons, an increase of 210,000 tons on a week-on-week basis, but it was still at a historical low level over the same period.

On the supply side, according to Mysteel's statistics, the total global shipping volume was 30.382 million tons, a decrease of 2.942 million tons from the previous week. Among them, the total shipment of iron ore from Australia and Brazil was 23.729 million tons, a decrease of 2.673 million tons from the previous week; the total shipment from Australia was 16.821 million tons, a decrease of 1.584 million tons from the previous week; of which, Australia shipped 12.884 million tons to China, a decrease of 2.966 million tons from the previous week; The total shipment volume of Brazil was 6.908 million tons, a decrease of 1.089 million tons from the previous week. Last week, the average daily output of domestic iron ore 266 mines was 440,300 tons, an increase of 7500 tons from the previous week, and the capacity utilization rate was 69.79%, an increase of 1.19% from the previous week. On the supply side, the overall shipment volume of external ores declined slightly, while the internal ores rose steadily and slightly, and the overall supply performance was tight.

In terms of demand, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 80.86%, a decrease of 0.13% from last week and a decrease of 10.16% from last year; the utilization rate of blast furnace ironmaking capacity was 91.89%, a week-on-week increase of 0.48%, and a year-on-year decrease of 0.02%; the profit rate of steel mills was 86.15%, a week-on-week increase of 0.87% and a year-on-year decrease of 6.93%; the average daily molten iron output was 2.4459 million tons, an increase of 12,800 tons from the previous week, and a year-on-year decrease 500 tons. Mysteel surveyed 163 steel mills with a blast furnace operating rate of 62.29%, a decrease of 0.14% week-on-week, a capacity utilization rate of 74.43%, a week-on-week increase of 0.1%, and a utilization rate of 81.03% excluding eliminated capacity, a decrease of 5.34% from the same period last year. The profit rate of steel mill was 76.69 %, a decrease of 1.23% week-on-week. Last week, demand for iron ore continued to climb at a high level, market participants should pay attention to the impact of the subsequent off-season and tightening expectations of production restrictions.

In terms of inventory, Mysteel counted that the imported iron ore inventory of 45 ports across the country was 12.5347 million tons, a week-on-week decrease of 874,600 tons; the average daily port congestion volume dropped by 43,700 tons to 2.9446 million tons. For different channels, Australian ores dropped by 105,300 tons to 65.2032 million tons, Brazil ores dropped by 1.0631 million tons to 36.7854 million tons, trade ores increased by 0.541 million tons to 64.951 million tons, pellets dropped by 95,300 tons to 3.8134 million tons, iron ore concentrate dropped by 0.1969 million tons to 8.8501 million tons, lump ore dropped by 31,600 tons to 17.5616 million tons, coarse fine dropped by 0.5508 million tons to95.1219 million tons; the number of ships in port down by 6 to 130. Iron ore inventory has changed from increase to decrease again. The overall inventory was at a low level over the same period. The pellet ore inventory has dropped significantly, the inventory of high-grade ore was relatively low, the price difference between high and low-grade ores continues to hit new highs, and the contradiction between the variety structure is more prominent, which played a certain extent supporting role for ore prices.

On the whole, the current supply and demand of iron ore are tightly balanced, the inventory remains a destocking state at a low level, the fundamentals are relatively healthy, and the price is relatively strong in the short term. In the future, investors need to pay attention to the situation of the shipment increase of foreign ores at the end of the second quarter, the performance of steel demand in the off-season and the implementation of production restrictions. Looking forward to the second half of the year, iron ore prices will fluctuate mainly in accordance with the national production restrictions. If production restrictions are relaxed or not implemented, iron ore prices will remain high and strong; if production restrictions begin nationwide, iron ore prices will be weaker in accordance with the intensity of production restrictions.

Strategy: None

Unilateral: neutrally hold the current positions in the short term

Cross-species: None

Inter-period: None

Spot-Futures Arbitrage: None

Options: None

Concerns and risks:

1. Policies curb excessive speculation and suppress high prices of raw materials

2. decline in demand for thread and hot-rolled coil in the off-season

3. the epidemic might worsen.

Rubber: The domestic production is gradually released, and the upside price space of the futures price is blocked.

Rubber futures prices fluctuated downward last week. After the RU price broke 13,000 yuan/ton, it fluctuated within a narrow range around this price. Last week's trading logic was still the basis convergence logic. Driven by the sharp decline in overseas raw materials, futures prices continued to bottom out.

The total inventory of domestic exchanges as of June 4 was 181,264 tons (+1,398), and the amount of futures warehouse receipts was 176,150 tons (-310). The overall domestic dry rubber output is limited, which has caused recent warehouse receipts and inventories to continue to be low year-on-year. As of May 27, the inventory in Qingdao Free Trade Zone continued to fall slightly, but the decline has narrowed recently. Investors should pay attention to the approach of inventory turning point.

The spot price center shifted downward last week. According to Zhuo Chuang's understanding, the volume of new rubber in domestic and foreign production areas is expected to continue to expand, while the demand side is showing signs of weakness, which makes prices lack support. Although foreign production areas have raised concerns about supply release due to the resurging of the new crown epidemic, the continued sharp drop in raw material prices in production areas reflects that the market is focusing more on the decline in demand; spot prices mostly follow the downward adjustment of the market. The overall offer in the Qingdao market is relatively active, but due to poor downstream and terminal demand, the overall transaction volume is limited. Recently, spot transactions have weakened, and warehouse outgoings have slowed down significantly. The focus of the external market price dropped slightly. Although the new rubber produced in Thailand has not yet been fully released, the purchase price of raw material rubber dropped sharply during the week. The main reason was that the epidemic in Southeast Asia has spread again, which has affected terminal demand. It was heard that some factories in Malaysia asked the Thai factory to postpone the shipment, which caused a sharp drop in the price of rubber in Thailand. In addition, due to the weak domestic market demand and the low willingness of tire factories to stock up, the U.S. dollar cargo generally witnessed a weak decline during the week. As of the end of last week, the rubber premium was 625 yuan/ton (+25) for synthetic rubber and the continuous decline of synthetic rubber price has led to a reversal of the spread.

In terms of downstream tire operating rate, as of June 4, the operating rate of all-steel tire companies was 60.46% (+5.1%), and the operating rate of semi-steel tire companies was 59.98 (+3.8%). The operating rate rebounded slightly last week. Due to weak domestic demand and hindered overseas exports, the rate of recovery was limited.

Opinion: Last week, prices of overseas raw materials fell sharply due to weaker demand. However, the main overseas production areas are still in the early stage of delivery, and the release of output is limited. After the negative reaction on the demand side last week, the decline in raw material prices may bring the factory's willingness to replenish part of the warehouse, and the price may be expected to stabilize. As the main production areas in Yunnan usher in full-scale delivery, the output will gradually increase and there will be both long positions and short positions in the suply side of the market. At present, domestic port inventory continues to be de-stocked, but the rate of de-stocking has slowed down in the past two weeks, mainly due to the slowdown in the purchasing rhythm of downstream factories, and attention should be paide to the coming of the inventory turning point in the later period. From the perspective of the spread structure, the domestic non-standard spreads have not narrowed significantly. At the same time, the operating rate of domestic downstream tire factories continues to decline, and the weakening of the demand will also drag down the price of rubber. It is expected that the price of rubber will fluctuate at a low level.

Strategy: neutrally

Risk points:

1. Domestic supply increases sharply

2. demand continues to weaken due to the impact of the epidemic

3. funding might be tight.

Crude oil: Iran negotiations are postponed, and the fundamentals of the US market are strong.

No agreement was reached in the fifth round of Iran’s nuclear talks last week, and follow-up negotiations will continue. But as far as the current time is concerned, hopes are slim before the Iranian government election on June 18, which will delay the return of Iranian oil to the market. The market expects that the return of Iranian oil to the market will be postponed from July to September. Last week, Brent crude oil exceeded $70/barrel. The market consensus of this boost is that this was due to the fact that Iran’s negotiations are delayed and OPEC’s wait-and-see attitude. However, we believe that the current strong oil price is supported by fundamental factors, mainly as follows: 1. The monthly difference of WT crude oil is significantly strengthened, and the discount to Brent crude oil has narrowed; 2. Recently, diesel oil cracks have significantly strengthened, and the profits of European and American refineries have been significantly restored; 3. The physical discounts of some oil types have rebounded. Of course, it should be noted that the current strong fundamentals of the oil market have obvious regional characteristics. The US market has the strongest recovery, followed by Europe, while the Asia-Pacific is relatively weak. From the perspective of US fundamentals, on the supply side, the increase in US shale oil production is still slow. Weekly EIA production data shows that U.S. crude oil production is still hovering at 11 million barrels per day, and the problem that new oil wells cannot compensate for the decline in old oil wells has begun to emerge. On the demand side, refined oil consumption has rebounded rapidly. So far, the US traffic congestion index has rebounded to above 80%, which is basically close to the travel level before the epidemic. The more beautiful is the US aviation consumption. With the increase in the number of travellers, the number of US TSA airport security inspections has risen rapidly in the past month, thereby boosting aviation kerosene consumption, which is also an important reason for the recent rebound in diesel split. At present, the number of US airport security checks has reached about 70% of the number before the epidemic, and jet fuel consumption is the last kilometer of the recovery of overall oil consumption. From the perspective of the operating rate of U.S. refineries, it has now recovered to about 90%, which has stimulated crude oil processing. However, it is worth noting that the increase in operating rates of U.S. refineries has not led to a significant increase in refined oil inventory. At present, both crude oil and refined oil inventories in the United States have returned to the level of the same period in the 5-year history. Therefore, the fundamentals of the current US market come from the boost of supply and demand. The trend of tightening fundamentals is expected to be maintained. The current tightness in the US market has begun to spread to non-US markets through prices and exports. We expect that the net import of crude oil from the United States will increase in the future and the price of its exported crude oil will increase, as the demand from local refineries increases and starts to compete with the export market for raw materials, while the European market will bear the brunt. In the context of OPEC's unwillingness to further increase production, the Asia-Pacific refineries will also feel the pressure of tight supply after the gradual resumption of production in the future. Strategy: neutrally, tend to be bullish in the short term; go long positions of crude oil Risk: The Iranian nuclear agreement might be reached before June 18 or a black swan appears in the epidemic. Copper: Supply and demand may both rebound, and copper prices are expected to fluctuate at high levels. Spot situation: According to SMM, the average price of SMM1# electrolytic copper in the week of June 4 was between 71,030 yuan/ton and 73,775 yuan/ton, and the average premium and discount quotation for Standard-Grade Copper was between -70 yuan/ton and 65 yuan/ton. When copper prices fell last week, downstream buying has returned, and both inquiries and active replenishment have increased. However, the holders have not taken the initiative to adjust premiums and discounts in order to ship as soon as possible, and there are still situations where prices are supported due to the reluctance to sell. Therefore, although spot transactions have rebounded, the extent is not very significant. Opinion: short term: Last week, the domestic imported ore TC price continued to rise by US$0.42/ton to US\$36.12/ton, and the tight supply at the mine end continued to be eased. In addition, the continued high price of sulfuric acid also made refineries profitable. Recently, the price difference of concentrate and scrap copper has gradually widened. The supply of scrap copper is also gradually increasing. This may make the future supply gradually move towards a relatively sufficient situation. But on the other hand, if prices fall due to increased supply, downstream demand will continue to recover while the traditional peak season for consumption is still present, which will support copper prices. Therefore, at present, for copper varieties, the greater probability is that the pattern of fluctuating at high levels will be maintained.

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.

Strategy:

1. Unilateral: cautiously bullish

2. Inter-market: go long positions on external market and short positions on internal market

3. Inter-period: postpone

4. Options: sell at out-of-value put options

Focus point:

1. The risk of tightening liquidity

2. Domestic delivery situation

3. Destocking in the second quarter fell short of expectations.

PTA: Destocking is expected to continue in June, and PTA processing fees increase rapidly.

Balance sheet outlook: Under the background of the implementation of TA overhaul, the balance sheet in June continued to be de-stocked; the apparent accumulation period is still to be July, and TA processing fees are still acceptable in the short term; the accumulation rate of PX inventory from June to July is limited, and it is expected that PX processing fee compression space is limited.

Strategic recommendations: (1) Unilateral: cautiously bullish (2) Intertemporal: under the circumstance that the price difference of 9-1 has rebounded sharply recently, waiting for reverse arbitrage opportunities.

Risks: The implementation of the PTA plant maintenance plan, the strength of the negative feedback of the maintenance of polyester filament, and the sustainability of the improvement in the supply and demand of aromatics due to the gasoline premium.

SMM讯，64日当周SMM1#电解铜平均价运行于71,030/吨至73,775/吨，平水铜平均升贴水报价则是运行于-70/吨至65/吨之间。上周铜价格呈现回落之际，下游买盘有所回归，无论是询价还是主动补库的情况均有所增多。但持货商却也并未主动让渡升贴水以求尽快出货，仍存在挺价惜售的情况。因此现货成交虽有所回升，但程度不算十分显著。

1. 单边：谨慎看多 2. 跨市：多外盘 空内盘 3. 跨期：暂缓；4. 期权：卖出虚值看跌

1. 流动性收紧的风险 2. 国内交仓情况 3. 2季度去库不及预期

PTA6月持续去库预期，PTA加工费快速走强