Iron ore: The arrivals of iron ore has increased, and the price of ore has dropped accordingly.
Opinion and logic:
Yesterday, both iron ore futures and spot prices showed a downward trend. The main iron ore contract fell 1.49% to close at 1,225 yuan/ton. Port spot prices fell by 5-30 yuan/ton throughout the day, and low quotations caused traders to be less enthusiastic about shipments. Qingdao Port Pb fines closed at 1,476 yuan/ton, down 9 yuan/ton, and SSF reported 1,030 yuan/ton, down 20 yuan/ton. Yesterday, the port spot transaction was 1.05 million tons, an increase of 50,000 tons from the previous week, and the overall transaction was still at a normal low level. Yesterday, the total volume of 45 port arrivals was 24.973 million tons, a week-on-week increase of 420,000 tons. The global shipment data was 29.36 million tons, a decrease of 670,000 tons on a week-on-week basis.
Recently, the scope of domestic steel companies' production reduction has gradually expanded, and the demand for iron ore as one of the important components of furnace charge has also been significantly compressed. But because the current restrictions on production are not too strong, the current market demand can be met only by adjusting the amount of scrap. With the gradual expansion of production restrictions, it may gradually affect the amount of iron ore. Therefore, the actual demand situation of ore in the near future will not deteriorate rapidly, but it limits the room for rising.
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, and high domestic and foreign consumption has been supporting the strong operation of iron ore prices. Looking ahead to the future, under the overall production restriction pattern, it is difficult for iron ore prices to have the strength to rise as the thread and hot-rolled coil end, and the price direction of iron ore depends on the strength 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 production restriction of crude steel is strong, iron ore inventory is expected to continue to accumulate, which will gradually turn the supply and demand pattern into oversupply. Therefore, we propose a unilateral strategy of short-term neutrality and tend to be bearish in the medium term, as well as a cross-species arbitrage strategy for initiating a long position of the nearby futures contract of the thread and hot-rolled coil and a short position of the distant futures contract of iron ore, but it needs to be adjusted in a timely manner in conjunction with the intensity of production restriction.
Unilateral: neutrally in the short term; tend to be bearish in the medium term (depends on the intensity of production restriction)
Cross-species: initiate a long position of the nearby futures contract of the thread and hot-rolled coil and a short position of the distant futures contract of iron ore
Spot-Futures Arbitrage: None
Concerns and risks:
1. The policy of restricting production production at the thread and hot-rolled coil end;
2. Domestic and overseas steel demand may weaken at the same time;
3. Iron ore shipping data, etc.
Rubber: Market supply has increased; overseas raw material prices were running on a weak side.
On July 16, the most-active RU contract closed at 13,500 (-70) yuan/ton, the price of mixed rubber reported 12,150 (-25) yuan/ton, and the basis of most-active contract stood at -325 yuan/ton (+120); the open interest of top 20 actively traded long positions was 106,456 (-5,008) lots, the short position was 152,087 (-1,982) lots, and the net short position was 45,622 (+3,026) lots.
On July 19, the most-active NR contract closed at 10,890 (-30) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,655 (-25) US dollars/ton, the SMR stood at 1,655 (-10) US dollars/ton, and the SIR figure was 1,605 (-20) US dollars/ton. The basis of most-active contract reported -505 (-100) yuan/ton.
As of Jul 16: the total inventory of domestic exchanges was 190,615 (+2,457) lots, and the amount of warehouse receipts of exchanges was 178,150 (+3,600) lots.
Raw materials: Sheet rubber 50.29 (+0.24), cup lump 44 (+0.50), latex 43.5 (-1.2), RSS3 52.55 (-0.75).
As of Jul 15, the operating rate of domestic all-steel tire factories was 58.95% (+15.35%), and the operating rate of semi-steel tire factories was 55.84% (+11.33%).
Opinion: The rubber price was adjusted slightly yesterday, and the overall price performance remained strong. From a fundamental point of view, raw material prices in Thailand remained weak, and prices of raw materials such as latex and RSS3 continued to present a downward trend yesterday. On the demand side, the operating rate of domestic tire factories has rebounded slightly, and the snow tire production peak season is approaching, which is expected to further increase the operating rate. However, due to the off-season in China and tire exports are still affected by ocean freight, coupled with the high inventory of finished products in tire factories, demand for raw materials from July to August may be difficult to boost. Therefore, the decline in Qingdao port inventory is more based on the decrease in imports in the past two months. In the future, market participants need to focus mainly on the rhythm of supply. At present, the price of rubber is at a low level, resulting in weak market supply and demand. However, under the boost of macro support and short-term demand rebound, rubber prices are expected to continue the rebound pattern, but the rebound space is limited.
Risk points: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: Oil prices fell more-than-expected, but fundamentals may restrict room for adjustment.
Yesterday oil prices fell more-than-expected, and there was no significant negative news in the market. We believe that the main reasons for the decline in oil prices are: 1. The deterioration of the overseas epidemic situation, especially in Europe and Southeast Asian countries. In some countries, such as the United Kingdom, France, and Myanmar, the number of new infections has reached a new high, which has increased the market's concerns about the pace of demand recovery. 2. The overall risk aversion sentiment in the financial market has strengthened, the dollar has appreciated sharply, and the yields of U.S. bonds have fallen sharply, resulting in suppression of risky assets including crude oil and stocks. 3. After the OPEC agreement landed, the market's favorable factors were fulfilled, and the long side has the motivation to close their holding positions for profits, but the OPEC agreement itself is not a negative factor for oil prices. Judging from the current situation, although the epidemic has caused some Asia-Pacific countries to upgrade their anti-epidemic measures, the economic recovery of Europe is still continuing. Therefore, the logic of the escalation of epidemic prevention measures caused by the soaring number of infections and thus dragging down oil demand may not necessarily dominate the market again, and the current destocking of crude oil inventory is still continuing normally. We believe that the decline in crude oil has been overreacted. Although there may still be room for decline, under the current fundamentals, there is very limited room for continuous adjustment.
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: Market fears about the recurrence of the epidemic have intensified, and copper prices have fallen.
In terms of spot: According to SMM, the spot market once again opened higher and then lowered yesterday. In the morning market, Standard-Grade Copper initially reported a premium of 380 yuan/ton, but there was no transaction in the market at this quotation level. It was difficult for buyers and sellers to reach agreement. Even if the holders slightly adjusted the price to a premium of 360-370 yuan/ton, the market was still difficult to see a large number of transactions. After the second period, some holders adjusted their prices slightly again to a premium of 350 yuan/ton, but the market transaction volume only picked up slightly. The High-Grade Copper market was still difficult to find sources of supply. A small amount of supply maintained the quotation at 400-420 yuan/ton, but there was only a small amount of just-needed purchases in the market. With the inflow of some imported sources of Hydro-Copper, its spread between the quotation of Standard-Grade Copper widened, and the overall premium quotation was 240-280 yuan/ton. Some brands, such as Zaldivar, offer a premiums below 200 yuan/ton, but the downstream had limited acceptance of high premiums, and there were few large transactions in the market.
Opinion: The spread of the Delta mutation virus made investors nervous about the global recovery and transferred funds to safe assets such as the U.S. dollar, which caused the U.S. dollar index to rise by more than 93 at one time. At the same time, crude oil prices have fallen sharply by more than 7%, and are currently down to 66.6 US dollars per barrel. Under such circumstances, it is also difficult for copper prices to get rid of the decline. However, when prices fall, there will also be part of the previously suppressed buyer demand in the second quarter to boost the market. Therefore, under the current circumstances, we still maintain our judgment on the volatility of copper prices.
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. Policy risks may increase.
PTA: TA basis has strengthened again, and warehouse receipts of factories and warehouses are gradually cancelled.
Balance sheet outlook: PTA was postponed to August before re-entering the inventory accumulation cycle;; the inventory accumulation rate of PX from July to August was limited.
(1) Unilateral: TA processing fees are on the high side in the short term, and it is recommended to maintain a wait-and-see attitude for the time being.
(2) Intertemporal: The inflection point of the inventory accumulation was postponed again. The inventory accumulation time before the delivery of the 09 contract was relatively insufficient, and the warehouse receipts of factories were also gradually cancelled; For the 9-1 spread, it is recommended to take a wait-and-see attitude for the time being.
Risks: The implementation of the PTA plant maintenance plan, the strength of replenishment of terminal speculation, and the progress of Zhejiang Petrochemical's new PX device into use.
1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓
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