Iron ore: Production restrictions stimulate speculative demand, and price trends have diverged.
Opinion and logic:
In terms of spot, the spot market fluctuated throughout the day, and most traders were less motivated to offer prices, while some traders were optimistic about the market outlook and took the initiative to purchase. The overall market demand was weak. Although steel mills had low inventories, mainstream fines are more favored.
In terms of futures, the most-active contracts of Liantie fluctuated around the high price level of 1250 yesterday. Due to the obvious structural contradictions, follow-up attention could be paid to changes in the spread between several deliverables.
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. Looking ahead, the national crude steel production limit for the whole year is expected to come back. Once the production restriction starts, the supply of scrap steel will decrease simultaneously, and the molten iron needs to make up for the missing part of the scrap steel. The price direction of iron ore depends on the intensity of domestic production restrictions. If the intensity of production restriction is small, due to the current tight global supply and demand of iron ore, the price is likely to continue to run on the strong side. If the crude steel production restrictions are greater, iron ore stocks are expected to continue to accumulate. Therefore, the supply and demand pattern will gradually turn into an oversupply, and subsequent prices are expected to run weakly.
Unilateral: tend to be bullish in the short term; under pressure in the medium term
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: Port inventory continued to fall, but its decline has weakened.
On July 6, the most-active RU contract closed at 13,380 (+220) yuan/ton, the price of mixed rubber reported 12,075 (+150) yuan/ton, and the basis of most-active contract stood at -455 yuan/ton (+325); the open interest of top 20 actively traded long positions was 109,576 (-4,496) lots, the short position was 159,495 (+1,159) lots, and the net short position was 49,919 (+5,655) lots.
On July 6, the most-active NR contract closed at 10,830 (+140) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,665 (+5) US dollars/ton, the SMR stood at 1,650 (+10) US dollars/ton, and the SIR figure was 1,615 (+10) US dollars/ton. The basis of most-active contract reported -395 (-89) yuan/ton.
As of Jul 2: the total inventory of domestic exchanges was 184,286 (+752) lots, and the amount of warehouse receipts of exchanges was 174,650 (-170) lots.
Raw materials: Sheet rubber 52.70 (+0.51), cup lump 42.2 (+0.55), latex 42.5 (0), RSS3 54.6 (+1.05).
As of Jul 1, the operating rate of domestic all-steel tire factories was 45.28% (-18.85%), and the operating rate of semi-steel tire factories was 44.75% (-14.2%).
Opinion: Yesterday, rubber futures prices continued to rebound. Driven by the continued rise in crude oil prices, the prices of the entire chemical sector generally rose. The domestic Qingdao port inventory announced yesterday continued the downward trend, but the decline has slowed down. From a fundamental point of view, with the end of the 100th anniversary celebration in China, it is expected that the tire plant operating rate will rebound again this week. At the same time, the narrowing of the RU non-standard spread also slowed down the market's hedging short power. Driven by futures market prices, raw material prices in Thailand stopped falling and rebounded yesterday, but the price of latex remained weak, which may reflect the abundant supply of raw materials. The loose fundamentals of the rubber market have not been improved, and the rebound is expected to be limited. It is recommended that short-term operation is appropriate.
Risk points: production may increase sharply, inventory may continue to accumulate, and demand may fall sharply.
Crude oil: The OPEC deadlock brought uncertainty and oil prices fluctuated sharply.
Oil prices fluctuated violently last night, with fluctuations of more than US$3 per barrel. OPEC's failure to reach a new production limit agreement has brought more uncertainty to the market.The market is worried that the incident may re-lead the price war last year, but according to the August OSP announced by Saudi Arabia yesterday, there is no sign of a price war. And Saudi Aramco crude's official selling prices (OSPs) have been raised to varying degrees for the four major export regions. But it is worth noting that when the UAE’s opposition led to the failure to reach an agreement, the statements of other non-OPEC countries are also critical. Large consumer countries including the United States and India have expressed dissatisfaction with the recent rising oil prices or concerns about rising inflation, while China has shown an attitude of restraining commodity prices. We believe that oil prices are already closer to the tolerance limit of these major consumer countries, and in terms of the possible direction of subsequent negotiations, there is a higher probability that the production increase plan and the extension of the production reduction plan will be negotiated separately. It is possible that the production increase plan is still to increase production by 400,000 barrels per day from 8 to 12 months, but the production reduction agreement will not be extended until April 2022. We believe that the current OPEC stalemate will not lead to a price war similar to that in April last year. The overall framework of the production restriction agreement has still not been destroyed, and the UAE is unlikely to withdraw from OPEC in the short term. At present, the upside risk of oil prices is still greater than the downside risk.
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: The U.S. dollar continues to rise, and copper prices are still in a volatile pattern.
Spot: According to SMM, the spot market quotations opened higher and lowered again yesterday. As the market price continued to run above 69,500 yuan/ton, it continued to curb downstream buying interest. Some holders were eager to dump the goods and adjusted their prices drastically, and the premiums and discounts fell rapidly. In the morning market, Standard-Grade Copper began to report at a premium of 150-160 yuan/ton to test the buying interest in the market, but the absolute price was too high, resulting in fewer market inquiries. Subsequently, some holders quickly adjusted the price to a premium of 120-140 yuan/ton, which made some rigid-demand buying orders enter the market, but it was still difficult to see a large number of transactions. After the second period, the market gradually offered a supply with a premium of 110 yuan/ton, and even a small amount of quotations of 100 yuan/ton flowed out in the late trading. The new adjustment of prices has caused some traders to purchase a small amount of goods to increase the reserve inventory. So far, the market transaction had slightly improved. The price of High-Grade Copper continued to fall under the drag of Standard-Grade Copper, from a premium of 160 yuan/ton in the morning market all the way down to a premium of 120 yuan/ton, but the market was still difficult to see a large number of transactions. Guixi Copper even reported a premium of 130 yuan/ton, but the price-performance ratio was limited and the market was not favored. Hydro-Copper still reported a premium of 60-80 yuan/ton under the guidance of a few brands such as BMK. However, buyers and sellers still had large differences in price, and it was difficult to reach a consensus.
Opinion: Yesterday the US ISM data showed that the US economic recovery is not very optimistic, and the US bond yields have indeed maintained a weakening pattern. But perhaps due to the recent relatively better performance of the US economic data compared to non-US regions, the US dollar still showed a relatively strong trend yesterday. The copper price is under pressure because of this, and the fundamental changes are currently limited, making the supply gradually loose. However, if the copper price drops, the previously suppressed demand in the peak season may also resurface. Therefore, the judgment of the volatility of the copper price is still maintained.
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 downstream bottle flakes experienced a decrease in production, and the production and sales of filaments fell slightly.
Balance sheet outlook: Balance sheet outlook: If TA overhauls are only partially implemented, there will be a turning point in inventory accumulation in mid-to-late July. If TA overhauls are fully implemented, the inventory will continue to accumulate in July, and the inflection point may be postponed again. The accumulation rate of PX inventory in July is limited, and it is expected that the space for compression of PX processing fees is limited.
Strategic recommendations: (1) Unilateral: cautiously bullish (2) Intertemporal: The 09 contract holdings are greater than the deliverable inventory, and market sentiment is highly uncertain. Therefore, it is recommended to take a wait-and-see attitude. The inflection point of the inventory accumulation is postponed to late July or early August, as the open interest of 09 contracts gradually fall, the 9-1 spread may gradually peak and then fall.
Risks: The implementation of the PTA plant maintenance plan, the strength of replenishment of terminal speculation, 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
1. 美联储货币政策导向 2.美元指数走势 3. 2季度需求是否能达预期 4.政策风险加剧