Iron ore: The expectation of restricting production has strengthened, and the price of iron ore fell yesterday.
Opinion and logic:
Yesterday, the most-active iron ore contracts fell all the way to close at 1,187.5 yuan/ton, down 36 yuan/ton, or 2.94%. Spot prices generally fell, and imported iron ore prices fell 10-33 yuan/ton throughout the day. Affected by news of some steel mills' adjustments to production plans, the market's expectations for crude steel production cuts have increased, and the demand for iron ore is expected to weaken. Qingdao Port PB fines reported 1,492 yuan/ton, down 33 yuan/ton, SSF reported 1,058 yuan/ton, down 25 yuan/ton, and the spread between high and low grad products was 434 yuan/ton. The trading volume at the main port yesterday was 758,000 tons, an increase of 8.1% from the previous week. Traders are actively shipping and reducing prices for promotion.
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: Spot prices were weak, and non-standard spreads widened slightly.
On July 8, the most-active RU contract closed at 13,395 (-20) yuan/ton, the price of mixed rubber reported 12,050 (-25) yuan/ton, and the basis of most-active contract stood at -420 yuan/ton (+12); the open interest of top 20 actively traded long positions was 108,660 (-2,492) lots, the short position was 153,293 (-3,016) lots, and the net short position was 44,633 (-524) lots.
On July 8, the most-active NR contract closed at 10,725 (-100) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,655 (0) US dollars/ton, the SMR stood at 1,650 (+5) US dollars/ton, and the SIR figure was 1,605 (0) US dollars/ton. The basis of most-active contract reported -340 (-90) 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 51.50 (-0.6), cup lump 42.55 (-0.15), latex 43 (+0.5), RSS3 53 (-0.82).
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 fluctuated within a narrow range and the rebound pattern continued. Due to increased supply and weak demand, the price of raw materials in Thailand's main producing areas remained weak. The current futures market rebounded only because of the weakening of short positions, and the fundamentals are temporarily unsupported. The recent narrowing of the spread between September and January RU futures contracts is more conducive to the short rolling. The spot price performance this week was weak, and when the market price went up, the RU non-standard spreads widened again. The loose fundamentals of rubber market have not improved significantly, and although the valuation is at a low level, the weak drive of supply and demand may limit the room for rebound.
Risk points: production may increase sharply, inventory may continue to accumulate, and demand may fall sharply.
Crude oil: The number of infections in the UK has increased, but the impact on oil consumption is limited.
The recent epidemic situation in the United Kingdom and other countries is also one of the important reasons for the adjustment of oil prices. As of the 7th, the number of new infections in the UK that day has exceeded 30,000, and the number of new infections has exceeded 20,000 for the seventh consecutive day. However, British Prime Minister Boris recently announced that he will decide to unblock the UK in the near future. The implementation of the decision to unblock the United Kingdom is mainly due to the higher vaccination rate. At present, more than 60% of adults in the UK have been vaccinated with 2 shots, which is close to the safety line of 70%. Therefore, because the vaccination is relatively smooth, the increase in the number of infections will lead to a very low possibility of re-closing the city. On the contrary, the recent escalation of epidemic prevention measures in some Asia-Pacific countries is also related to the slower local vaccination. Therefore, the logic of the recovery of oil consumption in Europe and the United States has not yet been destroyed, but we still need to pay attention to whether the number of subsequent infections continues to increase and whether the epidemic prevention measures are adjusted.
Strategy: neutrally bullish; 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: Fundamental changes are limited, and copper prices maintain a volatile pattern.
Spot: According to SMM, there was less trading in the spot market yesterday, and the market price remained fluctuating at high levels. This had caused the buying forces to maintain a wait-and-see attitude, and under the stalemate between buyers and sellers, there were few large transactions in the market. In the morning session, Standard-Grade Copper began to report a premium of 160 yuan/ton, but there were still few transactions in the market. Although some holders took the initiative to adjust the price to 150 yuan/ton, the buying still maintained a wait-and-see attitude. A small number of holders with spot exchange needs adjusted the price again to a premium of 140 yuan/ton, and these sources were immediately sold out. After the second trading session, there is almost no source of goods with a premium of 140 yuan/ton in the market. High-Grade Copper quotations were relatively strong, with a premium of 160-180 yuan/ton in the morning market. After the second period, ENM and other brands reported a premium of 150 yuan/ton, bringing a small amount of transactions. The supply of Hydro-Copper market was still tight: ESOX, BMK and other brands reported a premium of 80-100 yuan/ton, and even if the quotation was reported with a premium of 70 yuan/ton in the end of the trading session, there was still no large number of transactions in the market.
Opinion: The yield on the 10-year U.S. Treasury note continued to fall yesterday, and the market and even Fed officials are still divided on when the Fed will take action to reduce the bond purchase plan, which also caused the U.S. dollar index to fall. In terms of fundamentals, changes are relatively limited. Copper prices are expected to remain temporarily volatile under the conditions of upstream supply pressure and downstream buying support.
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: All three new production lines used to produce new materials of Yisheng have been successfully put into use; PTA processing fees have dropped rapidly.
Balance sheet outlook: After all the new production capacity of new materials of Yisheng is put into use, the inflection point of PTA's inventory accumulation may be restored to around mid-to-late July. 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: take a wait-and-see attitude; (2) Intertemporal: The open interest of the 09 contract has gradually decreased, and the speculative sentiment in the previous period has weakened. The market will gradually transition from a trading model in which the open interest of the 09 contract is larger than the volume of delivery warehouse order to a trading model when the inflection point of the accumulated inventory is expected to arrive in August. In terms of 9-1 spreads, the investment strategy suggests adopting reverse arbitrage when market prices are high.
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
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