Iron ore: Steel mills have increased overhauls, and demand is expected to weaken.
Opinion and logic:
Yesterday, both the open interest and trading volume of the most-active iron ore contracts dropped sharply and iron ore prices fluctuated throughout the day. The closing price reported 1,166 yuan/ton, down 12.5 yuan/ton, 1.08%. Spot prices generally rose, Qingdao Port PB fines reported 1,495 yuan/ton, an increase of 10 yuan/ton, SSF reported 1,055 yuan/ton, an increase of 5 yuan/ton, and the spread between high and low grade products was 440 yuan/ton. Yesterday, the trading volume of main ports stood at 992,000 tons, and the transaction volume rebounded slightly.
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. Yesterday, affected by the resumption of production in some Tangshan steel mills after the end of the party celebration, the demand for iron ore rebounded in the short term, and the price was on the strong side. However, at the same time, steel mills across the country have begun to undergo intensive maintenance due to annual production restrictions and low profits. Looking ahead, the national policy of restricting crude steel production is still the core factor determining the direction of iron ore prices. If the plan to reduce crude steel output throughout the year is strictly implemented, iron ore inventories are expected to continue to accumulate, which will gradually turn the supply and demand pattern into oversupply, and iron ore prices in the second half of the year are expected to run weakly.
Unilateral: tend to be bearish in the medium term
Cross-species: go long positions of thread and hot-rolled coil and short positions of coke and iron ore (the raw material end)
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: Raw material prices continue to fall, and the drag on the cost side continues.
On July 1, the most-active RU contract closed at 12,705 (-95) yuan/ton, the price of mixed rubber reported 11,775 (-100) yuan/ton, and the basis of most-active contract stood at -280 yuan/ton (-45); the open interest of top 20 actively traded long positions was 116,051 (+2,257) lots, the short position was 165,759 (+2,665) lots, and the net short position was 49,708 (-408) lots.
On July 1, the most-active NR contract closed at 10,150 (-190) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,625 (-15) US dollars/ton, the SMR stood at 1,625 (-10) US dollars/ton, and the SIR figure was 1,585 (-15) US dollars/ton. The basis of most-active contract reported 106 (-110) 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 53.75 (-1.35), cup lump 42 (-1), latex 46.5 (-2), RSS3 54.73 (-2.12).
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 rubber futures price remained weak, and the price of raw materials in Thailand's main producing areas continued to decline, which continued to drag the rubber cost side. This week, due to domestic environmental inspections, tire factory overhauls have increased, and the continued decline in operating rates has made the market expected to further weaken the demand for raw materials. The domestic Qingdao port inventory announced this week continued to decline, but spot prices were still weak, reflecting unsatisfactory demand. Major overseas production areas have gradually increased the delivery volume, and the prices of raw materials have continued to decline. The expectation of the peak supply season is enhanced, and prices are operating at a weaker pace under the weak supply and demand pattern. When the price is low, it is not recommended to increase the short position too much.
Risk points: production may increase sharply, inventory may continue to accumulate, and demand may fall sharply.
Crude oil: The UAE objected, and the OPEC meeting was postponed.
The OPEC meeting was postponed due to the UAE’s objection at the last minute of the agreement. Judging from the demands of the UAE, the main reason is to hope to increase the production of more crude oil. The UAE is one of the few OPEC countries that has increased production capacity in recent years. At the same time, the UAE launched Murban crude oil futures this year with the intention of increasing regional pricing power. Therefore, compared with other countries, the UAE has more interest in increasing crude oil production. We believe that OPEC will still reach an agreement with a high probability, but may reach a compromise on the extent of the UAE's increase in production. However, as far as the current general direction is concerned, OPEC still adheres to the principle of cautiously increasing production slightly to prevent further production cuts due to the possible return of Iranian oil to the market.
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: Copper prices maintain a volatile pattern.
Spot: According to SMM, yesterday was the first day of July, and trading volume returned to normal. In addition, as the overall market supply was tight, market quotations had rebounded sharply. In the morning market yesterday, Standard-Grade Copper began to report at a premium of 80 yuan/ton, and then market buying showed a wait-and-see attitude. After some holders quickly adjusted their prices to a premium of 60-70 yuan/ton, a large number of traders entered the market due to wide fluctuations in the inter-month basis. As a result, the premiums and discounts recovered after they dropped to 60 yuan/ton, and it was difficult to find a source of 60-70 yuan/ton in the late market. Some holders even adjusted their prices to a premium of 90 yuan/ton in order to lead the market. High-Grade Copper and Hydro-Copper fluctuated within a narrow range yesterday, and High-Grade Copper basically reported a premium of 80-100 yuan/ton. Only Guixi Copper had a small amount of sources with the price of 110 yuan/ton in the late trading of the afternoon session. However, the market price was still high, resulting in limited market favor, and there were few actual transactions in the market. Under the guidance of brands such as BIRLA and UMMC, Hydro-Copper reported a premium of 30-50 yuan/ton. In the case that the overall downstream buying was not booming, the downstream basically maintains just-needed purchases.
Opinion: Yesterday, as of June 26, the number of people applying for unemployment benefits in the United States at the beginning of the week was 364,000, which continued to hit the lowest level since the week of March 14 last year. This made the US dollar index still maintain a relatively strong pattern. However, due to the limited changes in fundamentals, copper prices are basically still in a volatile pattern. The current situation is that the traditional peak season may gradually pass, but some of the depressed demand due to the previous high prices may also be postponed. If the price drops significantly, the increase in demand will appear again. However, due to the current strengthening of the US dollar and the slowdown in destocking, the upper limit of copper prices is also under pressure. Therefore, under such circumstances, the probability of copper prices maintaining a volatile pattern is relatively high.
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: Yishengdahua’s PTA device has been suspended for a short time, and investors can continue to pay attention to the implementation of the July maintenance.
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 the intertemporal 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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