Iron ore: The crude steel production limit policy is reconfirmed, and iron ore is ushering in a cold winter.
Opinion and logic:
Yesterday, the Steel Union announced the production, sales and inventory status of the five major building materials commonly used in construction. In terms of output, the five major materials have seen a month-on-month decline for several consecutive weeks. Restricted production affected the price of iron ore to record lows. In the afternoon session, the policy on the adjustment of steel export tax rate was traded in advance by the market. Affected by the rise of the thread and hot-rolled coil end, although the iron ore rebounded in the later trading hours, it was difficult to change its weakness. To the close, the main iron ore futures contract 2109 closed at 1,115 points, down 23 points from the previous day. In terms of spot, the imported iron ore quotations in the physical port stock market fell 8-50 yuan/ton throughout the day. At present, Qingdao Port PB fines reported 1323, down 42; YangDi fines 1135 fell 25; Caofeidian PB fines 1320 fell 40, SSF 943 fell 14; Tianjin Port PB fines 1340 fell 50, JMBF 1235 fell 15; Jiangyin Port PB fines 1395 fell 45.
On the whole, the current black series market is destined to be dominated by policies. Due to production restrictions, steel mills' demand for scrap steel has shrunk sharply, and the month-on-month and year-on-tear ratio have both fallen sharply, which has greatly eased the pressure on iron ore from production restrictions. However, with the continuous deepening of production restrictions, the supply and demand of iron ore began to undergo a significant reversal. In the short term, the supply and demand of iron ore has not deteriorated significantly. Although the price has fallen, it can still maintain high price levels. As the scope of production restriction expands, the pressure on iron ore will gradually increase, and the opportunities of going short positions of the distant futures contract are recommended.
Unilateral: tend to be bearish in the medium term
Cross-species: initiate a long position of coke and a short position of iron ore (01 contract); initiate a long position of thread and hot-rolled coil (10 contract) and a short position of iron ore (01 contract)
Spot-Futures Arbitrage: None
Concerns and risks:
1. The intensity of production restriction and the policy orientation at the thread and hot-rolled coil end may fall short of expectation;
2. The off-season demand performance of the thread and hot-rolled coil end is not as good as expected;
3. Shipping data may change drastically;
4. The epidemic may aggravate and so on.
Rubber: The price of latex has risen again, supporting the price of rubber.
On July 29, the most-active RU contract closed at 13,370 (+165) yuan/ton, the price of mixed rubber reported 12,175 (+150) yuan/ton, and the basis of most-active contract stood at -445 yuan/ton (-110); the open interest of top 20 actively traded long positions was 76,273 (-4,004) lots, the short position was 110,555 (-9,027) lots, and the net short position was 34,282 (-5,023) lots.
On July 29, the most-active NR contract closed at 10,995 (+150) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,680 (0) US dollars/ton, the SMR stood at 1,675 (0) US dollars/ton, and the SIR figure was 1,605 (0) US dollars/ton. The basis of most-active contract reported -572 (-148) yuan/ton.
As of Jul 23: the total inventory of domestic exchanges was 193,886 (+3,271) lots, and the amount of warehouse receipts of exchanges was 177,270 (-880) lots.
Raw materials: Sheet rubber 49.90 (+0.6), cup lump 45.30 (+0.5), latex 45.5 (+1.5), RSS3 53.39 (+0.12).
As of Jul 22, the operating rate of domestic all-steel tire factories was 62.75% (+3.8%), and the operating rate of semi-steel tire factories was 58.65% (+2.8%).
Opinion: Yesterday, rubber futures prices rebounded sharply, mainly boosted by the surrounding market atmosphere such as crude oil. At the same time, we saw that after the price of latex in Thailand dropped sharply in the previous period, it has experienced a significant rebound recently, which also has certain support for the price of rubber. The relative strength of NR prices may also indicate the recent improvement in tire demand on a week-on-week basis. As of last weekend, due to a slight rebound in downstream acquisitions and a slowdown in imports, the latest port inventory continued its downward trend. The fundamentals of rubber itself have not changed much, and the supply and demand are weak. However, the stabilization of raw material prices and the continued decline of domestic port inventories still support the space below prices. The main line in the second half of the year is still overseas demand. If demand cannot continue to recover, the pressure on the supply side will be highlighted in the second half of the year. The rubber price is expected to fluctuate mainly in the short-term low position. The main logic of the second half of the year is still in overseas demand. If demand cannot continue to recover, pressure on the supply side will be highlighted in the second half of the year. With the rebound of raw material prices, rubber prices are expected to continue to rebound, and investors can pay attention to the resistance of futures and spot spreads widening in the future.
Strategy: cautiously bullish, participate in the short term
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: The discount of oil types related to Chinese demand has weakened significantly.
Recently, the discount of oil types related to Chinese demand has weakened significantly, such as ESPO, Castella, Johan Sverdrup, etc., especially the weak demand for geo-refining-related oil types, which is mainly dominated by policy factors, such as the recent inspections of crude oil quotas, taxation of private refineries and other fields, plus factors such as release of reserves. Among them, quotas are the biggest bottleneck restricting imports. This year, although China has adopted a series of policy combinations to make the oil market inclined to internal circulation. However, considering the consumption of inventories and the commissioning of more large private refining and chemical projects, in the medium term, the growth rate of China's crude oil imports will still rebound.
Strategy: neutrally bullish; go long positions of INE crude oil and short positions of Brent or WTI futures
Risk: The Iranian nuclear agreement may be reached quickly or the epidemic will worsen more than expected..
Copper: The U.S. dollar continues to fall, which is relatively favorable for copper prices.
In terms of spot: According to SMM, the State Reserve Bureau implemented the second round of reserve release yesterday. Most downstream players participated in the bidding, which led to limited spot market transactions and few large transactions in the market, but the holders unexpectedly maintained a positive sentiment of supporting price. In the morning session, Standard-Grade Copper began to report a premium of 280 yuan/ton to test the market sentiment, but the actual participants were limited, and there were few inquirers. It was not until the holders quickly adjusted the price to a premium of 260-270 yuan/ton that the market had a small number of transactions. The quotation of domestically produced High-Grade Copper was dragged down by the premium of imported High-Grade Copper such as CCC-P, ENM and other brands at 290-300 yuan/ton. As holders were unable to maintain the sentiment of supporting prices, the overall premium quotation was 290-330 yuan/ton. The quotation of Hydro-Copper also highlights the more obvious brand differences, and some poorer brands such as LPT even offer a premium of 130 yuan per ton. Because downstream players generally participated in auctions by the State Reserve, market trading activity was limited.
Opinion: The initial value of the US real GDP annualized quarterly rate in the second quarter was recorded at 6.50%, which was 0.1 percentage point higher than the previous value, but far less than the expected value of 8.50%. However, the initial value of the annualized quarterly rate of the core PCE price index in the second quarter of the United States recorded 6.10%, a jump of 3.6 percentage points from the previous value. However, the US dollar index did not benefit from this and continued its previous weakness. This is undoubtedly a more favorable factor for copper prices, especially when the fundamental changes are relatively small.
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: Cautiously bullish
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 maintenance continues to increase, and processing costs are further pushed up.
Balance sheet outlook: Under the background of the full implementation of the maintenance, the PTA August balance sheet has little pressure on inventory accumulation, and the rapid inventory accumulation time node will be postponed to September; the inventory accumulation rate of PX from July to August was limited.
(1) Unilateral: cautiously bullish; TA liquidity tend to be tight and the inventory accumulation time node was postponed to September. However, the current PTA processing fee has been at a high level during the year, and risks need to be paid attention to.
(2) Intertemporal: For the 9-1 spread, it is recommended to take a wait-and-see attitude for the time being.
Risks: PTA factory's control over the maintenance rhythm, the strength of replenishment of terminal speculation, and the progress of Zhejiang Petrochemical's new PX device into use.
1. 单边：谨慎看多 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓
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