Iron ore: The market is turbulent and iron ore prices are under pressure.
Opinion and logic:
Yesterday, both the open interest and trading volume of the most-active iron ore contracts rose sharply, and the closing price reported 1,196 yuan/ton, up 24.5 yuan/ton, or 2.09%. Qingdao Port PB fines reported 1,503 yuan/ton, up by 12 yuan/ton, SSF stood at 1,065 yuan/ton, up by 18 yuan/ton, and the spread between high and low grade products was 438 yuan/ton.
National Bureau of Statistics: In the next stage, efforts should be made to guide the return of commodity prices to the fundamentals of supply and demand, and promote the sustained and stable recovery of the industrial economy. Tiejun Luo, vice chairman of the China Iron and Steel Association, pointed out that traders and mines' price hikes, Singapore swaps, and Platts index have jointly pushed iron ore to a crazy level. According to Mysteel's statistics, China's 45 port arrivals totaled 21.63 million tons, an increase of 1.834 million tons from the previous week. Australia and Brazil shipped 27.723 million tons of iron ore, a week-on-week increase of 3.541 million tons; Australia shipped 19.812 million tons, a week-on-week increase of 1.524 million tons; of which Australia shipped 15.603 million tons to China, a week-on-week increase of 805,000 tons; while the figure for Brazil was 7.911 million tons, an increase of 2.017 million tons from the previous week. The total global shipping volume was 34.688 million tons, an increase of 4.820 million tons from the previous week. The arrival and shipment data increased simultaneously, and were still within the historical normal range.
On the whole, the domestic and international supply and demand of iron ore have been in a tight balance since the beginning of this year, supporting the strong operation of iron ore prices all the way. In May, the State Council investigated the high prices of bulk commodities, and the price of iron ore subsequently dropped, but now it has returned to and maintained at a relatively high point. In the short term, as approaching the celebrating of the 100th anniversary of the founding of the China Communist Party, the steel and coal sectors have started to stop production for 1-2 weeks, and the scope is still expanding. This is expected to have less impact on iron ore. Looking ahead, the turbulent industrial policy is still the core factor in determining the price of iron ore. If the Ministry of Industry and Information Technology's plan to reduce the output of crude steel throughout the year continues, and the steel industry's capacity and output double control becomes more stringent, iron ore prices in the second half of the year will be highly pressured.
Unilateral: tend to be bullish in the short term, and the later trend depends on industrial policy
Cross-species: go long positions of thread and hot-rolled coil
Spot-Futures Arbitrage: None
Concerns and risks:
1. The implementation of the policy of limiting production at the thread and hot-rolled coil end;
2. Domestic and overseas steel demand may weaken at the same time;
3. Iron ore shipments, etc.
Rubber: The supply is gradually increasing, and the price of raw materials is weak.
On June 28, the most-active RU contract closed at 13,150 (-80) yuan/ton, the price of mixed rubber reported 12,050 (-75) yuan/ton, and the basis of most-active contract stood at -375 yuan/ton (0); the open interest of top 20 actively traded long positions was 109,315 (-35) lots, the short position was 156,787 (+905) lots, and the net short position was 47,472 (+940) lots.
On June 28, the most-active NR contract closed at 10,770 (-25) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,680 (-10) US dollars/ton, the SMR stood at 1,670 (-10) US dollars/ton, and the SIR figure was 1,630 (0) US dollars/ton. The basis of most-active contract reported -244 (-2) yuan/ton.
As of June 25: the total inventory of domestic exchanges was 183,534 (+930) lots, and the amount of warehouse receipts of exchanges was 174,820 (+190) lots.
Raw materials: Sheet rubber 57.3 (-0.29), cup lump 43.55 (+0.2), latex 49.5 (0), RSS3 59.46 (-0.4).
As of June 24, the operating rate of domestic all-steel tire factories was 64.13% (+7.21%), and the operating rate of semi-steel tire factories was 58.95 +6.2(%).
Opinion: Yesterday, the price of rubber fluctuated within a narrow range, and the main overseas production areas gradually increased the delivery volume, which brought the price of raw materials weak. Backed by the favorable market sentiment, the price of rubber continued to rebound yesterday. As the futures prices stopped falling and rebounded last week, the RU non-standard spreads widened again, reflecting the weakness of spot prices. The tire operating rate rebounded last week, but it still did not rebound to the high operating rate before May, reflecting the downward shift in demand and the expected increase in the peak supply season. Under the current weak supply and demand pattern, prices are unlikely to perform well.
Risk points: production may increase sharply, inventory may continue to accumulate, and demand may fall sharply.
Crude oil: The market expects OPEC to increase production slightly.
On July 1st, OPEC will hold a meeting to discuss production restrictions. The market expects that OPEC will only increase production slightly, that is, production in August is expected to increase by 500,000 barrels per day from the previous month. We believe that OPEC has a high probability of maintaining the current cautious production strategy unchanged, the main reasons are:
1. The unpredictability of the lifting of Iran's sanctions. If Iranian oil returns to the market in the second half of the year, and OPEC increases production to match demand, supply and demand will be unbalanced again, and production will have to be reduced (similar to October 2018);
2. The current global inventory destocking has not been completed;
3. The uncertainty of demand growth still exists (especially the speed and extent of recovery). In addition, those in the OPEC member countries that lack the capacity to increase production are expected to oppose or postpone the increase.
Strategy: neutrally, tend to be bullish in the short term; go long positions of INE crude oil and short positions of Brent or WTI futures
Risks: The Iranian nuclear agreement may be reached quickly or OPEC may increase production beyond expectations.
Copper: Pressure and support coexist, and copper prices maintain a volatile pattern.
In terms of spot: According to SMM, the market price yesterday remained around 68,300 yuan/ton and fluctuated within a narrow range, and downstream buying was hard to see a recovery. The long-term trade orders are suspended, and the next month's contract dominates the market. The market's demand for the current month's contract was obviously lower than that of the end of last week. In the morning market, the price of Standard-Grade Copper for the next month contract was quoted at a premium of about 70-80 yuan/ton to test the market's buying power, but the market was hard to see buying interest, and trading was sluggish. Some holders still have spot exchange requirements, so they adjusted their quotations to a premium of 50-60 yuan/ton, but it was still difficult to see active trading, resulting in deadlock between buyers and sellers. After the second period, the holders adjusted the price again to a premium of 40 yuan/ton before the transaction rebounded slightly. The quotations of High-Grade Copper and Hydro-Copper fell slightly following the quotations of Standard-Grade Copper. High-Grade Copper reported 70-100 yuan/ton, and Guixi-Copper even reported a premium of 80 yuan/ton in late trading, but it was still difficult to see a deal. Under the guidance of BL and other brands, Hydro-Copper reported a discount of 20 yuan to 10 yuan/ton for the next month contract, but it was not attractive to downstream buying, and both buyers and sellers maintained a see-saw trend.
Opinion: Yesterday, the market as a whole showed a relatively cautious attitude. At present, Fed officials still have certain differences on when to start reducing QE, and the U.S. dollar is currently in a turbulent pattern. In terms of fundamentals, it is now at the turn of the traditional low and peak seasons. And on the supply side, TC prices have continued to rise in recent weeks, and the supply of scrap copper has also increased. However, on the other hand, since part of the original peak season demand in the second quarter was suppressed due to the relatively high copper price before, this situation may also reappear after the current copper price has fallen. Therefore, there is also a certain buying support below. Under such circumstances, copper prices may still maintain a shock pattern between 65,000 and 70,000.
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: The production and sales of filament are increasing, and TA processing fees are still strong.
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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