Iron ore: In the absence of supply support, iron ore is unlikely to change its downward trend.
Weekly summary: Due to the gradual implementation of the restricted production policy, iron ore has started a shock-declining mode in the past month. Last week, the futures market continued its weak pattern. The main 01 contract closed at 841.5 yuan/ton, down 58.5 yuan/ton from last Monday's opening. In terms of spot, as of last Friday, Qingdao Port PB fines reported 1122 yuan/ton, down 73 yuan/ton from Monday’s early trading. SSF reported 770 yuan/ton, down 75 yuan/ton from Monday’s early trading. At the same time, the Platts 62% index has fallen back to 160.85 US dollars/ton. In terms of transactions, the average daily transaction volume at major ports last week was 790,000 tons, which is an absolute position over the years.
On the supply side, according to Mysteel statistics, the total shipment of iron ore from 19 ports in Australia and Brazil was 25.666 million tons, an increase of 942,000 tons from the previous month. Among them, the shipping volume of Rio Tinto's two ports hit a new high this year. The global iron ore shipment totaled 32.15 million tons, an increase of 893,000 tons from the previous month. China’s 45 ports’ arrivals totaled 26.634 million tons, an increase of 4.468 million tons from the previous month; the six northern ports’arrivals totaled 14.263 million tons, an increase of 2.808 million tons from the previous month. Judging from the recent import data released by the customs and the diversion data caused by the recovery of overseas pig iron consumption, it is expected that the domestic iron ore supply will decline year-on-year.
In terms of demand, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 75.00%, an increase of 0.39% from last week and a decrease of 16.93% from last year; the utilization rate of blast furnace ironmaking capacity was 85.89%, an increase of 0.17% from the previous week, and a decrease of 9.27% from the same period last year. The profit rate of steel mills was 89.18%, a week-on-week increase of 1.30% and a year-on-year decrease of 6.06%; the average daily molten iron output was 2.2863 million tons, a week-on-week increase of 4,500 tons, and a year-on-year decrease of 246,700 tons. Mysteel surveyed 163 steel mills with a blast furnace operating rate of 57.60%, an increase of 0.41% week-on-week. The capacity utilization rate was 69.82%, an increase of 0.55% week-on-week, and the utilization rate excluding eliminated capacity was 76.00%, a decrease of 11.01% from the same period last year, and the profit rate of steel mills was 77.91 %, an increase of 0.61% week-on-week. The daily average port congestion volume was 2.9917 million tons, an increase of 148,000 tons. Although Mysteel's blast furnace operating rate, average daily molten iron output, and port congestion volume increased slightly this week, we believe that this is only a short-term rhythm problem and does not change the general trend of declining iron ore demand.
In terms of inventory, Mysteel counts that the imported iron ore inventory at 45 ports across China is 12.6283 million tons, a decrease of 110,000 tons from the previous week. Among them, Australian ore 6411.80 increased by 19.1, Brazil ore 3491.18 increased by 33.84, trade ore 7044.50 increased by 38.3, pellets 388.61 increased by 4.53, iron ore concentrates 933.66 decreased by 6.51, lump ore 1948.05 increased by 35.41, coarse iron powder 9357.98 decreased by 44.43; the number of ships at ports was 199, increased by 7. It should be noted that the number of ships at ports has been at an absolute high in the recent past, and there will still be a greater risk of inventory accumulation in the future.
On the whole, the current iron ore market will remain weak due to restrictions on the consumption side and lack of support on the supply side. In recent months, some steel mills’ plans to put blast furnaces into production have been postponed, and capacity withdrawal has been relatively smooth, resulting in continuous compression of iron ore demand. Looking to the future, the trend of iron ore most likely depends on the intensity of domestic production restrictions. According to our calculations, if the implementation of production restriction is less than 20%, the impact on iron ore will be small. If the implementation of production restrictions is greater than 40%, it will be extremely negative for iron ore. According to our analysis, the production restriction policy will most likely be strictly implemented, and we recommend the strategy of initiating a short position of iron ore when price hits high.
Unilateral: tend to be bearish in the medium term
Cross-species: initiate a long position of thread and hot-rolled coil and a short position of iron ore
Spot-Futures Arbitrage: None
Options: buying a put option
Concerns and risks:
1. The intensity of production restriction and the policy orientation at the thread and hot-rolled coil end may be not as good as expected;
2. The off-season demand performance of the thread and hot-rolled coil end may be not as good as expected;
3. Shipping data may change drastically;
4. The epidemic may aggravate and so on.
Rubber: Investors can pay attention to supply changes; the short-term downside of rubber prices is limited.
Rubber futures prices rose first and then fell last week. In the first half of last week, due to the impact of the Southeast Asian epidemic, the delay of domestic import shipping schedules caused the market to worry about supply-side disturbances, which brought strong price shocks. In the second half of last week, as the market sentiment turned weak, prices returned to weakness.
The total inventory of domestic exchanges as of August 20 was 211,342 tons (+4278), and the amount of futures warehouse receipts was 186,380 tons (+4810). Since the current time node is in the peak season for rubber delivery in China, especially the recovery of output in the main producing areas of Yunnan, the recent stock exchange growth rate has increased. As of August 15th, due to the limited number of arrivals at ports, inventory in Qingdao Free Trade Zone continued to fall slightly, and the absolute amount was also at a low level in recent years compared with the same period last year.
In terms of downstream tire operating rate, as of August 19, the operating rate of all-steel tire companies was 61.33% (-2.52%), and the operating rate of semi-steel tire companies was 57.29 (-2.91%). In the off-season of demand, the tire factory operating rate is still insufficient to recover, but the overseas snow tire production has brought the operating rate to continue to rise. Seasonally, the operating rate in September is expected to usher in a seasonal improvement.
Viewpoint: At present, the demand for rubber is showing a slight rebound, mainly because the domestic downstream will gradually go out of the off-season, and the peak season for overseas snow tire production will stabilize the operating rate of domestic tire factories. However, due to the greater domestic economic pressure in the second half of the year, automobile production and sales may further weaken. However, overseas demand has been repeatedly affected by the epidemic, and the demand recovery has been slower, resulting in a limited recovery in the total demand in the future. Therefore, the demand side or more shows a stable pattern. Therefore, changes on the supply side may become the dominant factor in later price fluctuations. The domestic supply side mainly focuses on the progress of domestic arrivals. Judging from the current domestic port inventory, due to the impact of the Southeast Asian epidemic this year, the pace of domestic arrivals has slowed down significantly, leading to continued destocking of domestic port inventory. With the further increase in the domestic tire operating rate in the future, if the arrival volume still cannot be increased, the trend of destocking of domestic port inventory will be difficult to end, forming a strong support for domestic rubber prices. Once imports increase, domestic supply pressure will gradually appear. In view of the limited shipping schedule in August, price pressure is not obvious, and short-term prices may not fall sharply. From the perspective of future inventory changes, the spread between RU and NR is expected to be further narrowed.
Risk points: Domestic supply may increase substantially, demand will continue to weaken due to the epidemic and other impacts, and funds may be tight.
Crude oil: Oil prices continue to fall, but the downside may be limited.
Oil prices fell sharply last week. Since the beginning of August, oil prices have fallen by nearly $10 per barrel, and the overall decline has exceeded expectations. First of all, from the perspective of macro factors, the possibility that the Fed will gradually reduce the scale of bond purchases in the future and the strength of the U.S. dollar will suppress overall commodity prices. The disadvantage of this is relatively clear. At the same time, it is worth noting that the inter-month spread in crude oil and Brent Dubai EFS also fell from a high level, which also implies that the current fundamental situation has changed. We think the most concerning and inexplicable factor is the sharp fall of Brent Dubai EFS. According to the logic of weaker Asia-Pacific demand, Dubai should be the weakest performer, but the fact is that Brent and WTI are weaker than Dubai.
We believe that the main reasons are as follows: 1. From the traffic congestion index, the current round of Delta epidemic has had a more obvious impact on the demand in Eurasia. From the data point of view, the European traffic congestion index fell from around 90% at the end of July to 60%, while China fell from 100% to 80%, and the changes in other parts of the Asia-Pacific region were not significant. Therefore, in terms of actual impact, the impact of the epidemic on the consumption of refined oil in Europe is greater than that in the Asia-Pacific. 2. China, India, Japan, South Korea, and the four countries in the Asia-Pacific region do not have a large buying interest for crude oil. However, since Brent Dubai EFS was at a high level before and the cost of crude oil procurement in the Western Region was even higher, the main targets for reduction were crude oil in the Western Region, such as West Africa, North Sea, South America, and the Mediterranean. The physical discounts of these oil types are also weak, especially those oil types that are directly linked to local refining needs. In addition, US crude oil exports remain at a high level of 2.5 to 3 million barrels per day, and monthly exports to Europe are also maintained at 1 million barrels per day. Due to the lack of arbitrage buying in Asia and insufficient local demand, competition in the crude oil market in the Atlantic Basin has intensified.
However, in the future, we are still cautious about the downside of crude oil. On the one hand, the impact of the epidemic has already been Price In, unless more countries join the ranks of the lockdown, and the traffic congestion index has basically bottomed out. On the other hand, China's oil inventory destocking has basically entered the second half. The fourth batch of crude oil quotas issued by the Ministry of Commerce in September will significantly boost the buying interest of refineries. In addition, the adjustment of oil prices will also stimulate refineries' willingness to purchase. In addition, the most important thing is that in this round of adjustments, the refined oil crack spread is still at a high level, and refinery profits have not been harmed. This shows that the logic of demand recovery has not yet been destroyed, and more is the lack of demand on the crude oil side. The current market is still in the process of destocking global oil inventories. Since entering the second half, it is reflected in the destocking of consumer countries such as China and India, which has a negative impact on short-term prices. However, with the improvement of the epidemic situation and the re-issuance of crude oil quotas, the spot market is expected to turn from weak to strong again. Therefore, we do not believe that the crude oil spread structure will be changed from Back to Contango, unless Iranian oil returns earlier than expected, and the downside of the unilateral price of crude oil will also be limited.
Copper: Macro factors suppress market sentiment, and copper prices continue to be under pressure.
Spot situation: According to SMM news, the average price of SMM 1# Copper Cathode in the week of August 20 was between 67,190 yuan/ton and 70,340 yuan/ton, and showed a downward trend in the middle of last week. The average premium and discount quotation of Standard-Grade Copper runs from 5 yuan/ton to 270 yuan/ton, with large fluctuations during the week. After rising to a weekly high on August 18, it declined significantly in the last two days of last week. Last week, the price of copper fell more sharply. The Shanghai Copper 10 contract fell from a maximum of 70,900 yuan/ton to a minimum of 65,770 yuan/ton. It closed at 67,510 yuan/ton on Friday night, a weekly drop of 2,490 yuan/ton.
Short-term view: From a macro point of view, the monthly rate of retail sales and the annualized data of new housing starts fell more than expected in the United States in July. In China, the added value of industrial enterprises above designated size in July, the total retail sales of consumer goods, and the national fixed asset investment from January to July were all lower than expected. Weak economic data has caused the market to panic about weakening consumption. On the other hand, the number of people applying for unemployment benefits on the first day of last week fell for four consecutive weeks. With the recovery of employment, the minutes of the Fed's July meeting hinted at the reduction of QE during the year, and the market's Taper expectations are heating up. At the same time, the National Development and Reform Commission once again voiced its efforts to ensure the supply and price stability of bulk commodities. The macro-negative factors are intertwined to suppress market sentiment and plunge copper prices.
On the macro level, the global central bank will continue to maintain the current ultra-loose monetary and fiscal policies in the short term. However, the recent strengthening of the Fed’s taper expectations has led to a substantial strengthening of the U.S. dollar, which is not very beneficial to the overall non-ferrous metal sector, including copper. 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, there is currently no situation in which copper has accumulated inventory immediately after entering the off-season. In the future, investors need to continue to pay attention to the emergence of inventory turning points.
1. Unilateral: neutral
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
1. Inflection point of inventory accumulation.
PTA: Crude oil drove costs down, and the reduction of polyester production continues to suppress PTA processing fees.
Balance sheet outlook: Under the background of the full implementation of the maintenance of filament companies, the PTA August balance sheet was revised from a medium destocking to a small destocking; the inflection point of the inventory accumulation was advanced to near the end of August, but the inventory accumulation rate is controllable; The Asian PX August balance sheet went flat.
(1) Unilateral: take a wait-and-see attitude, and to initiate long positions after processing fees were compressed by the production reduction of filament companies.
(2) Intertemporal: For the 1-5 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 load situation of Zhejiang Petrochemical PX; the maintenance time of polyester reduced load..
上周油价大幅回落，自8月初以来油价下跌幅度近10美元/桶，整体跌幅超预期，首先从宏观因素来看，美联储未来可能逐步缩减购债规模以及美元的强势，对整体大宗商品价格形成打压，这一点的利空是相对明确的，同时值得注意的是原油月差、Brent Dubai EFS也出现高位回落，这也暗示当前的基本面形势出现了变化，我们认为最令人关注和费解的因素是Brent Dubai EFS的大幅回落，如果按照亚太需求走弱的逻辑来看，应该Dubai表现最弱，但事实却是Brent、WTI要弱于Dubai，我们认为其中主要的原因如下：1、从交通拥堵指数来看，本轮Delta疫情对于欧亚地区的需求均产生了较为明显的冲击，从数据上看，欧洲的交通拥堵指数从7月底的90%左右下跌至60%，而中国从100%下跌至80%，亚太其他地区变化不太显著，因此实际影响来看，疫情对于欧洲成品油消费的冲击要大于亚太；2、中印日韩亚太四国的原油买兴不佳，但由于此前Brent Dubai EFS处于高位，西区原油采购的性价比更差，因此主要削减的对象是西区的原油，如西非、北海，南美、地中海等，此类油种的实货贴水也表现偏弱，尤其是那些与地炼需求直接挂钩的油种，而除此之外，美国原油出口维持在250至300万桶/日的高位，每月出口到欧洲的数量也维持在100万桶/日，由于缺乏亚洲的套利买盘，加之本地需求不足，大西洋盆地的原油市场内卷加剧。
策略：1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓