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Daily morning for Crude oil, PTA, natural rubber, iron ore, copper Iro (ZH & EN) 20210722

Fang submitted 2021-07-22 09:43:34

Iron ore: The black series had mixed fluctuations, and the price of iron ore is difficult to rise.

Opinion and logic:

Yesterday, iron ore futures fell all the way, and the most-active 09 contract closed at 1,174 yuan/ton, down 3.85% from the previous day. Physical port stocks all declined. Qingdao Port Pb fines closed at 1,440 yuan/ton, down 22 yuan/ton, and SSF reported 1,010 yuan/ton, down 31 yuan/ton. Market transactions were uneven throughout the day. Total transactions concluded to be insipid in Jingtang Port and Tianjin Port, while Qingdao and Rizhao Port had relatively active trading sentiment, and transactions were relatively better.

The heavy rains in Henan recently caused all local traffic to be paralyzed, and production and transportation were severely affected. According to the Steel Federation, the iron ore transportation of two steel mills was affected, and the daily transportation volume that was affected is expected to be about 20,000 tons.

Recently, the scope of domestic steel companies' production restrictions has been expanded and the efforts have been strengthened. According to yesterday’s news, all the furnaces in the steel mills and coke enterprises in the Guye District of Tangshan are limited to 50% production. A steel plant in Guangxi underwent overhaul of two 450 cubic blast furnaces, affecting an average daily output of 4,000 tons. Iron ore, as an important charge, will also be affected to varying degrees according to the intensity of production restrictions. At present, the intensity of production restriction has not yet reached the desired target state, and the current situation can be met only by adjusting the amount of scrap steel. With the further strengthening of production restrictions, it may gradually affect the amount of iron ore. Therefore, the current actual demand for ore will not deteriorate rapidly, but the room for increase is limited. Yesterday, the National Development and Reform Commission held a national price work conference. The meeting analyzed the current price situation and requested the local price authorities to focus on strengthening price detection and early warning and anticipation management.

On the whole, China's domestic demand is currently being greatly affected. Under the general environment of global economic recovery, excessive overseas demand for iron ore has also been released at the same time, and high consumption has supported 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.

Strategy: None

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

Inter-period: None

Spot-Futures Arbitrage: None

Options: 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: The price of raw materials continued to fall, and the cost support of rubber prices was weak.

On July 21, the most-active RU contract closed at 12,955 (+35) yuan/ton, the price of mixed rubber reported 11,900 (+50) yuan/ton, and the basis of most-active contract stood at -330 yuan/ton (-35); the open interest of top 20 actively traded long positions was 99,384 (-1,846) lots, the short position was 147,790 (+467) lots, and the net short position was 48,406 (+2,313) lots.

On July 21, the most-active NR contract closed at 10,515 (+185) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,635 (-10) US dollars/ton, the SMR stood at 1,625 (-10) US dollars/ton, and the SIR figure was 1,575 (-15) US dollars/ton. The basis of most-active contract reported -303 (-285) 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 48.39 (0), cup lump 43 (-0.65), latex 41 (-1), RSS3 50.26 (0).

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 price of raw materials in Thailand continued to fall yesterday. The hanging upside-down pattern of latex and cup lump prices continued, while the price of RSS3 remained at a relatively high level. If part production of the latex is transferred to RSS3 due to high production profits, it will bring about a further drop in the price of RSS3, and the opening of the import window will also begin to exert pressure on the RU market. Therefore, if the price of latex cannot stop falling, it will still suppress the market price. Domestic demand is still showing off-season characteristics, and the short-term recovery of tire factory operating rate is limited, but after the sharp decline in the early period, there is basically no room for downwards. In the later period, the main focus is on the rhythm of supply. When the market price is at a low level, due to the fact that supply and demand are weak, it is expected that the rubber price will fluctuate mainly at a low level.

Strategy: neutral

Risk points: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.

Crude oil: EIA refined oil inventories fell and oil prices rebounded sharply.

Oil prices rose sharply yesterday. Judging from the EIA data, we believe that the market is in a state of intertwined longs and shorts. On the one hand, crude oil inventories have grown more than expected, but refined oil inventories have declined, and market concerns about demand have eased. We believe that the sharp rebound in oil prices is still mainly due to the overreaction of the previous price plunge. July 19 to July 20 is the expiration date of the WTI August contract. Bulls stepping and liquidity factors caused oil prices to plummet, but they did not reflect the true fundamentals. Therefore, after the factors at the transaction level are digested by the market, there is a demand for upward repair of the inter-month spread and unilateral price, and the previous plunge is just a better buying opportunity.

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: The amount of the second round of reserves release has been decided, and the copper price reaction is "calm".

In terms of spot: According to SMM, the spot market continued yesterday's trend of opening higher and moving lower. In the morning session, Standard-Grade Copper initially reported a premium of 350 yuan/ton to test the buying power of the market, but there were few large transactions. In addition, as imported goods gradually flowed into the market, some holders quickly adjusted their quotations to a premium of 330-340 yuan/ton in response, and even a small amount of quotations dropped to a premium of 320 yuan/ton in the late trading. However, both buyers and sellers in the market were deadlocked, and there were almost no actual transactions. Deal. High-Grade Copper such as CCC-P and ENM imports continued to flow in, but the 400-420 yuan/ton premium price had no price advantage, resulting in few transactions in the market. However, the supply of Guixi Copper and Jinchuan plate was still relatively scarce, which had widened the spread, with the overall premium quotation was 390-420 yuan/ton. Hydro-Copper also has sources such as M/B and MV that had flowed into the market, and the overall quotation had dropped significantly, reporting a premium of 160-200 yuan/ton, with the spread between Standard-Grade Copper once again widened to about 150 yuan/ton.

Opinion: Yesterday, the State Reserve Bureau clarified that the second round of reserve release of copper was 30,000 tons, and the auction time was July 29. However, the market's response to this has been very calm. And when the US dollar index fell from a high level yesterday, copper prices still only rebounded slightly. In addition, the recent floods caused by heavy rains in Henan have relatively limited impact on copper, and changes on copper fundamentals are still relatively small. Therefore, we believe that copper prices will continue to fluctuate in the future.

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 implementation of reserve release, 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

Focus point:

1. The Fed's monetary policy orientation

2. The trend of the US dollar index

3. Policy risks may increase.

PTA: The typhoon affected PTA factory shipments, and TA spot liquidity tightened again.

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.

Strategic recommendations:

(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.








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