Iron Ore: Iron ore rebounded, pay attention to the sentiment of the spot market.
Iron ore fell sharply in the context of the previous restrictions on crude steel production, but it rebounded last week. As of Friday's close, the main iron ore 01 contract closed at 840 points, up 62 points (7.9%) from the previous week. Affected by futures, the spot market also rose to varying degrees. The lowest spot price of PB fines at Cao Port was 1,056 yuan/ton, down 47 yuan/ton from last week. SSF reported 720 yuan/ton, an increase of 10 yuan/ton from last week, and the basis has also been significantly reduced. As of last week, the basis of the SSF corresponding to the iron ore 01 contract was 109 points, which was 51 points less than the previous week.
In terms of supply, global iron ore shipments totaled 33.039 million tons, a month-on-month increase of 4.462 million tons. The total amount of iron ore shipped from 19 ports in Australia and Brazil was 26.192 million tons, an increase of 3.425 million tons from the previous month; Australia shipped 17.584 million tons, an increase of 2.532 million tons from the previous month; of which 13.68 million tons were shipped from Australia to China, an increase of 678,000 tons from the previous month; Brazil shipped 8.608 million tons, a month-on-month increase of 893,000 tons. This week, iron ore shipments have increased substantially compared to the previous month. Under the background of domestic crude steel production restrictions, iron ore still shows surplus expectations.
In terms of demand, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 74.22%, an increase of 0.65% from the previous week and a decrease of 17.19% from the previous year; the utilization rate of blast furnace ironmaking capacity was 85.30%, a decrease of 0.17% from the previous week, and a year-on-year decrease of 9.34%. The profit rate of steel mills was 89.18%, a decrease of 0.00% week-on-week and 6.06% year-on-year; the average daily molten iron output was 2.2705 million tons, a week-on-week decrease of 4,600 tons and a year-on-year decrease of 248,700 tons. Mysteel surveyed 163 steel plants with a blast furnace operating rate of 57.32%, an increase of 0.14% week-on-week; a capacity utilization rate of 69.39%, an increase of 0.16% week-on-week; a utilization rate excluding the eliminated capacity of 75.53%, a decrease of 10.68% from the same period last year; and a steel mill profit rate of 77.91 %, the same week-on-week. The data shows that the operating rate of the blast furnace is showing a downward trend. With the increase in the breadth and intensity of the production restriction, the operating rate may shrink to a greater extent, and the result is a decline in the output of molten iron. Therefore, the demand for iron ore will decline.
In terms of inventory, Mysteel counted the import iron ore inventory of 45 ports nationwide was 1,2920.9, an increase of 125.12 week-on-week; the average daily port congestion volume increased by 1.37 to 296.48. Australian ores increased by 133.5 at 6548.24, Brazilian ores increased by 73.3 at 3731.5. Trade ore increased by 135 at 7338.4, pellets increased by 7.7 ay 420.7, iron ore concentrates increased by 34.4 at 1025.2, lump ore increased by 28.1 at 1980.2, coarse iron powder increased by 54.97 at 9494.9. The number of ships in the port was 182, a drop of 3. Due to the decline in operating rates, market transactions were insipid. The increase in arrivals has led to a certain increase in inventory at the port, and the increase in inventory is relatively large.
On the whole, the current Ferrous complex is dominated by policies. Due to the limited production and lower-than-expected consumption, steel mills' demand for scrap steel has shrunk sharply, and the month-on-month and year-on-year ratios have both fallen sharply, which has greatly eased the pressure on iron ore caused by production restrictions. However, with the continuous deepening of production restrictions, the supply and demand of iron ore will begin to undergo a significant reversal. There are signs of a short-term rebound in market prices. In the short term, pay attention to the situation of steel mills restocking inventory, and need to track the sentiment of the spot market and price changes. In the long run, with the implementation of the future production restriction policy, iron ore still faces greater downward pressure. In the long run, the opportunity of initiating a short position of the distant futures contract of iron ore is 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; 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 when price hits high
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: Port inventory is at a year-on-year low, and the room for rubber prices to continue to decline will be limited.
Last week, rubber futures prices fell sharply, on the one hand it was a macro push. The expectation of the Fed to shrink its balance sheet makes the market atmosphere weaker, and Shanghai Rubber is approaching its delivery period, and the premium of the 09 contract is still under pressure. NR is under pressure as the operating rate of domestic tire factories further weakens.
The total inventory of domestic exchanges as of August 27 was 219,592 tons (+8250), and the amount of futures warehouse receipts was 188,780 tons (+2400). Due to the domestic rubber delivery peak season, especially the increase in output in the main producing areas of Yunnan, the recent stock exchange growth rate has continued to increase. The difference in the inventory changes of dark and light colored rubber has also brought about a further narrowing of the spread between the two. As of August 22, the inventory in Qingdao Free Trade Zone continued to fall slightly due to the lower than expected arrivals, and the absolute amount was also at a low level in recent years compared to the same period last year.
In terms of downstream tire operating rate, as of August 26, the operating rate of all-steel tire companies was 55.89% (-5.44%), and the operating rate of semi-steel tire companies was 57.65 (-0.36%). The weak domestic demand and the pressure on the finished product inventory of tire factories have caused the recent operating rate to continue to decline. Seasonally, the operating rate in September is expected to usher in a seasonal improvement, but due to the economic downturn in overseas, the overall improvement is limited.
Opinion: After the sharp decline last week, the spread between rubber futures and spot prices has further narrowed, and the hedging pressure on the market may be eased to a certain extent. From the perspective of supply and demand, demand is facing downward pressure on the domestic and foreign economies, and the overall peak season improvement of "golden September and silver October" may be relatively limited. However, the room for tire factory operating rates to continue to decline may also be limited. In the future, the main focus will be on the destocking of the finished product inventory of the tire factory, otherwise the raw material procurement motivation will not be shown. Therefore, the demand side basically tends to be weak and stable, and future price fluctuations may come more from changes on the supply side. Until the trend of inventory destocking in domestic ports is not reversed, the support for rubber is expected to remain strong. The upward momentum of prices needs to see a significant improvement on the demand side and further tightening on the supply side. The short-term supply and demand drive is weak, and prices are expected to fluctuate mainly at low levels.
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: The hurricane affected the U.S. Gulf oil supply chain, and refined oil crack spread increased.
Oil prices rebounded sharply last week. From the perspective of the inter-month spread, Brent's performance is stronger than WTI, and the BW spread has narrowed significantly, mainly due to the 20 million barrels reserve release plan of the US Department of Energy last week. From the perspective of output, inventory, and refinery operating rate, the fundamentals of the United States are still relatively healthy, and the trend of destocking has not been reversed. However, since the released strategic reserves are mainly sulfur-containing crude oil, Mars in the U.S. Gulf region has significantly increased its discount to LLS, and the market has already “Price in” the U.S. Department of Energy’s reserve release plan. On the other hand, although Mexico’s offshore platform fire caused a production interruption of about 420,000 barrels per day, most of the lost production will be restarted within a week. At present, the Mexican National Petroleum Corporation said that it will be able to restore most of its production before Monday, so the impact of the Mexican fire has been minimal.
At present, the market is most concerned about the impact of Hurricane Ida. The hurricane has made landfall in Louisiana and has a direct impact on the oil supply chain in the Gulf of America. In terms of oil production, the affected capacity is approximately 1.74 million barrels per day, and the affected refinery’s capacity is 2.11 million barrels per day. At the same time, the logistics infrastructure has also been significantly affected, such as the suspension of operations in the Port of Louisiana and the temporary closure of parts of the Colonial Pipeline. Although the current supply and demand are almost the same in terms of impact, historically, the possibility of damage to offshore oil platforms is low, and they will recover quickly once the hurricane passes. However, facilities such as ports, piers, pipelines and refineries are more vulnerable to damage and slower to recover. We believe that the short-term gasoline and diesel crack spread in the United States will be significantly boosted. Since the supply and demand of crude oil are affected by similar magnitudes, the directionality is not significant, and the future depends on the speed of the recovery of upstream and downstream infrastructure. With reference to historical conditions, if there are no secondary disasters such as floods in 2018, the impact on the oil market will also be short-term. Many hurricanes in history have also proved that the oil supply chain in the U.S. Gulf region has strong resilience.
Strategy: neutral, go long of U.S. distillate oil crack spreads
Risk: The impact of the hurricane was less than expected.
Copper: Powell's speech finally landed, and it may drive copper prices upward in the short term.
Spot situation: According to SMM news, the average price of SMM 1# Copper Cathode in the week of August 27 was between 68,270 yuan/ton and 69,610 yuan/ton, showing a trend of first rising and then falling in the middle of the week. The average premium and discount quotation of Standard-Grade Copper ran from 180 yuan/ton to 200 yuan/ton, with little fluctuation in the middle of the week. Copper prices rebounded last week. The Shanghai Copper 10 contract rose from a minimum of 67,590 yuan/ton to a maximum of 69,860 yuan/ton. It closed at 69,680 yuan/ton on Friday night, a weekly increase of 2,090 yuan/ton.
Short-term view: From a macro point of view, the US manufacturing PMI announced last week fell short of expectations, and the overall performance of US real GDP in the second quarter and the number of people who applied for unemployment benefits for the first time last week performed well. The Jackson Hole meeting, which has attracted much market attention, was held. Powell said that Taper might be appropriate during the year. He also emphasized that inflation is temporary and pointed out that Taper is not a signal to raise interest rates. In this speech, Powell deliberately played down the influence of Taper, which was interpreted as a "dovish" signal by the market, and the price of copper rose in response to Friday night trading.
From a fundamental point of view, in terms of copper concentrates, the TC index rose again last week, and positive and negative news on the mining end appeared frequently. Focus on Chile’s mining royalties bill, which has been approved by the House of Representatives and is currently under consideration in the Senate. If passed, a 3% royalties will be imposed on the sales of Chilean copper, which will affect the output of Chilean copper concentrate. With regard to copper scrap, due to the continued impact of the Southeast Asian epidemic, the volume of scrap copper imports fell month-on-month in July. At present, scrap copper has no substitute advantage for refined copper, which supports the consumption of refined copper to a certain extent. In terms of imports, LME Copper was relatively strong last week, which led to a continuous decline in the import price ratio, and the import profit and loss narrowed. In terms of reserves release, the State Reserve Bureau announced that the third copper reserve release was 30,000 tons, which was the same as the previous time. In terms of inventory, LME inventory cancellation warehouse receipts soared to 100,000 tons, and SHFE weekly inventory continued to destock. In terms of downstream consumption, according to SMM, the operating rate of refined copper increased for three consecutive weeks last week. However, with the continuous weekly rebound of copper prices, downstream purchasing sentiment is currently cautious. Therefore, consumption is relatively supportive under the current background of low inventories and high premiums. The bullish macro factors may stimulate copper prices to rise in the short-term, but we need to be cautious about the upside.
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. The Fed's monetary policy orientation
2. The trend of the US dollar index
3. Policy risks may increase.
PTA: Yisheng's supply of new materials rebounded, and downstream negative feedback continued.
Balance sheet outlook: Under the background of the full implementation of the maintenance of filament companies, the PTA September balance sheet ushered in the first inflection point of inventory accumulation, but the accumulation rate is controllable. In September, the Asian PX balance sheet entered the accumulation phase for the first time.
(1) Unilateral: take a wait-and-see attitude, and to wait for the PTA processing fee to be further compressed.
(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..
策略：1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓