Iron ore: The spot is improving, and the market price is closely following its trend.
Opinion and logic:
Yesterday, the open interest of iron ore increased. As of the close, the iron ore 2109 contract closed at 1,175 yuan/ton, an increase of 26 yuan/ton from the previous day. The spot transaction volume of iron ore in main ports nationwide was 907,000 tons, down 13.5% from the previous day. The price of imported iron ore in Qingdao Port increased by 15-30 throughout the day. The current PB fines increased by 30 to 1445, PB lumps increased by 10 to 1,860, Carajás iron ore fines (SFCJ) increased by 15 to 1,755, SSF increased by 15 to 1,035 and Yangdi fines increased by 15 to 1,150.
China Central Television（CCTV）once again focused on iron ore. Since mid-May of this year, the price of iron ore has fluctuated sharply, dropping by nearly 20%. From the perspective of the national port transaction volume, the port spot transaction volume has fallen sharply since May. The average transaction volume last Sunday was about 886,000 tons, which was a sharp drop of about 58.8% from the May 7 high of 2.15 million tons. Previously, China severely cracked down on the chaos of foreign iron ore price increases, which caused iron ore prices to fall back in mid-May, but then it rebounded again.
On the whole, the iron ore shipping data is normal, and there is no obvious change on the iron ore supply side. In terms of inventory and news, the inventory in Northeast and North China has decreased significantly. Affected by market news, etc., iron ore prices may fluctuate in the near future. In the medium and long term, the expectation of suppressing the raw material end by the production restriction policy still exists. Once the policy is implemented, there is a high probability that iron ore will enter a state of surplus. Coupled with the approaching off-season, this will also affect expectations. However, based on the current situation of high basis, the high valuation spot will inevitably fall. In the short term, due to policy disturbances, it is still recommended to take a wait-and-see attitude.
Unilateral: neutrally hold the current positions in the short term
Spot-Futures Arbitrage: None
Concerns and risks: the intensity of production restriction at the thread and hot-rolled coil end is not as good as expected, the demand for the thread and hot-rolled coil end is strong, and overseas pig iron production exceeds expectations by a large margin.
Rubber: Demand weakened and raw material prices continued to fall.
On June 9, the most-active RU contract closed at 13,005 (-40) yuan/ton, the price of mixed rubber reported 12,025 (0) yuan/ton, and the basis of most-active contract stood at -480 yuan/ton (-60); the open interest of top 20 actively traded long positions was 124,149 (-956) lots, the short position was 174,866 (-2,661) lots, and the net short position was 50,717 (-1,705) lots.
On June 9, the most-active NR contract closed at 10,745 (+35) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,685 (0) US dollars/ton, the SMR stood at 1,675 (-5) US dollars/ton, and the SIR figure was 1,645 (+10) US dollars/ton. The basis of most-active contract reported -224 (-37) yuan/ton.
As of June 4: the total inventory of domestic exchanges was 181,264 (+1,398) lots, and the amount of warehouse receipts of exchanges was 176,150 (-310) lots.
Raw materials: Sheet rubber 62.42 (0), cup lump 44.8 (+0.1), latex 52 (-1.5), RSS3 63.81 (-0.42).
As of June 4, the operating rate of domestic all-steel tire factories was 60.46% (+5.1%), and the operating rate of semi-steel tire factories was 59.98% (+3.8%).
Opinion: The price of rubber continued to weaken yesterday. Overseas latex factories production was affected due to the epidemic, and reduced demand for rubber caused overseas prices to continue to fall. The latest port inventory announced this week continued to decline, mainly driven by the slight rebound in the downstream purchase last week and the decrease in port arrivals. But according to the latest understanding, the downstream purchases volume was not large this week. Weak domestic demand and blocked exports may make it difficult for tire factory operating rates to recover. From a later point of view, the main domestic production areas in Yunnan are about to usher in full-scale delivery, and the supply is expected to increase. Overseas will also enter the peak production season, supply is expected to rebound, domestic demand is weaker than the previous week, and supply and demand are generally weak.
1. Production increases substantially
2. Inventory accumulates substantially
3. Demand drops significantly
Crude oil: EIA crude oil inventories fell while refined oil inventories increased.
Yesterday EIA announced inventory data, among which crude oil inventories dropped sharply and refined oil inventories increased significantly. The main reason is that refinery operations have increased significantly. Last week, the U.S. refinery operations rate rose to 91%, basically returning to the pre-epidemic level. We believe that there is no need to worry too much about the large accumulation of refined oil inventories. On the one hand, in the past one month, the overall accumulation of refined oil inventories is not as good as the seasonal performance, and the overall oil inventory is still lower than the same period in 5 years; On the other hand, as the U.S. travel consumption is boosted, downstream gas stations and traders will be driven to replenish inventory. At present, the main bottlenecks of US refined oil consumption are still in two aspects: one is that jet fuel consumption has not fully recovered, and the other is that demand in Latin America is still relatively weak, which drags down refined oil exports. The future performance of the US refined oil market needs to pay attention to the recovery of these two parts.
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 event appears in the epidemic.
Copper: China's CPI data exceeded expectations, and copper prices remained fluctuating at high levels.
On the spot side: According to SMM news, the Shanghai copper market closed higher yesterday, once again suppressing downstream buying interest, downstream inquiries have decreased, and it was even more difficult to see a large number of transactions. Today, the inter-month spread expanded again in the morning session, and some arbitrageurs became active again, making the premium to remain a same trend that the quotation was high first and then declined. In the morning market, Standard-Grade Copper initially reported a premium of 90 yuan/ton, however no one paid any attention. After that, some holders adjusted the price to a premium of around 70-80 yuan/ton. Before 9:30, the inter-month spread was once expanded to around 300 yuan/ton, and some traders made some transactions again. After 9:30, the monthly difference fluctuated in the range of 280-220 yuan. After the second period, the inter-month spread was fluctuating mostly in the range of 230-260 yuan/ton. When the inter-month spread narrowed, arbitrageurs were eager to liquidate their positions, followed by an outflow of sources with a premium of 60 yuan/ton, then the transaction slightly improved. High-Grade Copperreported a premium of around 100-130 yuan/ton. Brands such as CCC-P did not improve due to shortage of supply. Holders continue to show a sentiment of supporting prices, but it is difficult for buyers and sellers to reach a consensus, and there are few actual transactions. In the Hydro-Copper market, Spence, Esox and other brands have stocks, but the overall price was still at the same level of the Standard-Grade Copper to a premium of 30 yuan/ton. Holders maintained a sentiment of supporting prices and were unwilling to transfer to a discount before delivery.
Opinion: The CPI data released by China yesterday recorded 1.3%, which is higher than expected and the previous value. The current supply-side pressure on prices may gradually appear. The rebound of TC prices and the gradual flow of copper scrap may suppress the upward space for copper prices. But on the other hand, since it is the peak consumption season now, if copper prices fall, it will also stimulate the previously suppressed demand due to high prices, which will also support copper prices. The recent strong crude oil prices may also support the non-ferrous metal sector, including copper, so that the copper price will not fall too sharply. It is expected that the copper will still maintain fluctuating at high levels. Tonight, we need to pay attention to the US CPI data and the results of the euro zone interest rate resolution.
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.
1. Unilateral: neutrally
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
1. The Fed's monetary policy orientation
2. The trend of the US dollar index
3. Whether the demand in the second quarter can meet expectations
4. Policy risks may intensify.
PTA: Filament price cuts promoted a sharp rebound in production and sales.
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.
1. 单边：中性 2. 跨市：多外盘 空内盘 3. 跨期：暂缓；4. 期权：卖出看跌
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