Iron ore: The game between Longs and Shorts has intensified, and iron ore fluctuates widely.
Opinion and logic:
Yesterday, the iron ore market opened high and then declined. In the afternoon session, the iron ore bottomed out and rebounded, showing a wide-ranging fluctuating trend as a whole. The closing price of the iron ore 2109 contract was 1,164.5 yuan/ton, a decrease of 8.5 yuan/ton, or 0.72%, from the closing price of the previous trading day, with the open interest losing 12,228 lots. In terms of spot, the spot price of imported iron ore of ports showed a mix of gains and losses throughout the day. The PB fines price of Qingdao Port reported 1,475 yuan/ton, down 8 yuan/ton, and the PB fines price of Tianjin Port stood at 1,490 yuan/ton, which was the same as yesterday. In terms of transactions, due to the greater volatility of the futures market, the spot transaction was poor yesterday, and the market sentiment was mainly dominated by a wait-and-see attitude.
In terms of demand, the steel production, sales and inventory data released by the Steel Union show that the total inventory of the five building materials commonly used in construction is 21.1007 million tons, an increase of 561,800 tons on a week-on-week basis. Among them, the social inventory is 14.4541 million tons, which is an increase of 216,500 tons on a week-on-week basis; the factory inventory was 66.466 million tons, an increase of 345,300 tons on a week-on-week basis. As downstream steel consumption enters the off-season, steel mill inventories have increased for three consecutive weeks, and there are obvious signs of steel inventory accumulation. At the same time, the weekly production of steel is also declining, and iron ore demand is expected to weaken.
In general, the recent investigations conducted by the National Development and Reform Commission on iron ore spot market transactions have strengthened the market’s expectations for policy regulation. The repeated changes in market sentiment have cooled speculation, coupled with the off-season of steel consumption, and more steel mills have stopped production for maintenance, it is expected that domestic iron ore consumption will continue to weaken. On the other hand, the current iron ore has maintained a relatively large discount. Before the local production restriction policies are implemented, the price of iron ores is still more likely to run on the strong side. However, there are many uncertainties on the policy side. We recommend that investors maintain a neutral wait-and-see attitude in the short term, and pay more attention to policy changes in the future.
Unilateral: hold a neutral wait-and-see attitude in the short term
Spot-Futures Arbitrage: None
Concerns and risks: the intensity and policy orientation of the production restriction at the thread and hot-rolled coil end, the off-season demand performance at the thread and hot-rolled coil end, and the worsening of the epidemic, etc.
Rubber: Supply and demand are weak, and rebound space is limited.
On June 24, the most-active RU contract closed at 13,010 (+75) yuan/ton, the price of mixed rubber reported 11,975 (+25) yuan/ton, and the basis of most-active contract stood at -360 yuan/ton (-25); the open interest of top 20 actively traded long positions was 114,558 (-3,245) lots, the short position was 159,920 (-1,791) lots, and the net short position was 45,362 (-1,454) lots.
On June 24, the most-active NR contract closed at 10,670 (+100) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,690 (+15) US dollars/ton, the SMR stood at 1,680 (+15) US dollars/ton, and the SIR figure was 1,630 (+10) US dollars/ton. The basis of most-active contract reported -104 (+88) yuan/ton.
As of June 11: the total inventory of domestic exchanges was 182,604 (+1,029) lots, and the amount of warehouse receipts of exchanges was 174,630 (-810) lots.
Raw materials: Sheet rubber 57 (-0.12), cup lump 42.7 (+0.15), latex 49.5 (0), RSS3 59.36 (-0.23).
As of June 11, the operating rate of domestic all-steel tire factories was 56.92% (-5.39%), and the operating rate of semi-steel tire factories was 52.75 (-5.91%).
Opinion: Supported by the market atmosphere, the price of rubber continued to rebound yesterday. From a fundamental point of view, the pattern remains weak. The main domestic production areas are ushering in the peak season for delivery, and the raw materials from Yunnan production areas are also being released. Based on the unsatisfactory price of the concentrated latex in the Hainan production area this year, part of the production capacity has returned to full latex, and the increase in standard products is expected to heat up. The weak demand performance is reflected in the slow decline in the operating rate of domestic tire factories. The continued decline in port inventory will bring about a continued decline in the spread between RU and NR. Although the absolute price is at a low level, due to the weak supply and demand drive, it is expected that the rubber price will continue to be weak, and the rebound space is limited.
Risk points: production may increase sharply, inventory may continue to accumulate, and demand may fall sharply.
Crude oil: U.S.-Iran divergence still exists, pay attention to OPEC production restriction meeting.
Approaching the OPEC meeting, the market is concerned about the decision-making of oil-producing countries. Recently, Saudi Arabia said that OPEC should be responsible for controlling inflation. This statement seems to imply that oil prices are close to the price ceiling that Saudi Arabia tolerates. Taking into account the current market conditions, as Iranian oil cannot return to the market in a short period of time, coupled with the slow resumption of shale oil production in the United States, only the limited production alliance can increase production in the short term. In particular, Saudi Arabia still has a large amount of surplus capacity. Therefore, Saudi Arabia still has the ability to control oil prices, but whether it has such a willingness is still unknown. The current market generally expects that OPEC will continue to increase production after August, but the pace of increase is uncertain. The mainstream expectation is still a gradual increase in production rather than a complete relaxation of production restrictions.
Strategy: neutrally, tend to be bullish in the short term; go long positions of crude oil
Risk: The Iran nuclear agreement reaches quickly or a black swan event appears in the epidemic.
Copper: The Biden government once again implemented a fiscal stimulus package, and copper prices maintained a volatile pattern.
In terms of spot: According to SMM, the copper market surged first and then fell yesterday. The performance of market buying power was still weak, and as the middle of the year is approaching, the bank’s accumulation of reserves has led to a strong market for spot exchange sentiment. Fortunately, some market participants had demand for bills, which made the premiums and discounts rebound slightly in late trading. In the morning market, Standard-Grade Copper initially reported at a discount of around 40-30 yuan/ton, but market transactions were weak. Although some holders quickly adjusted their prices to a discount of 50 yuan/ton in exchange for spot, the market was still difficult to see a large number of transactions. However, the holders were unwilling to adjust prices again, causing the market to be in a stalemate for a time. After the second period, the buying power had strengthened, and some trade buying actively received goods, making the discount slightly warmed to around 30 yuan/ton. The quotations of High-Grade Copper and Low-Quality Copper were relatively stable. Except for Guixi-Copper, which was reported stable at the level of Standard-Grade Copper, the rest of High-Grade Copper stood at a discount of 30-10 yuan/ton. It was difficult to see price differences between different grades. The supply of Hydro-Copper market was relatively scarce, and it was difficult to find a large number of new quotations in the later trading market. A small number of brands such as BIRLA reported a discount of 80-70 yuan/ton to guide the overall market quotation.
Opinion: Yesterday, US President Biden announced that he agreed to the infrastructure plan proposed by the bipartisan senator group. According to media reports, the total cost of the program is US$1.2 trillion. The program lasts for 8 years and includes approximately $559 billion in new expenditures. But fundamentally, the current traditional peak season for copper varieties is coming to an end. On the supply side, TC prices continue to rise, coupled with the impact of tapering issues, the supply side may have a relatively negative impact on prices. Therefore, it seems that the fundamentals' support for copper prices has weakened in the short term. However, there is still greater uncertainty in the macro aspect, so the current copper varieties may still be dominated by shocks for the time being.
In the medium and long term, macroeconomically, the global central banks will continue to maintain the current ultra-loose monetary and fiscal policies in the short term. Although the U.S. dollar has moved strongly after the interest rate meeting, it is largely an overdraft for future economic growth. In terms of fundamentals, the current TC price continues to rise, coupled with the domestic rumor of tapering, so the supply side has a relatively negative impact on copper prices. 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. However, due to the current market interference from the rumors of the Federal Reserve tapering and the possible tightening of central bank liquidity around the world, in general, we recommend that investors maintain a relatively neutral attitude.
1. Unilateral: neutrally
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
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 increase.
PTA: In the context of the July contract reduction, PTA continued to strengthen.
Balance sheet outlook: Under the background of the implementation of TA overhaul, the accumulating rate in July is relatively controllable, 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：暂缓 3. 跨期：暂缓；4. 期权：暂缓
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