Iron Ore: The production restriction policy has tightened, and iron ore has fallen sharply.
The policy of restricting crude steel production has been further deepened recently. Due to the strengthening of dual control of energy consumption, the Guangxi region imposed production restrictions on local steel companies, and some companies reduced their output by 20%. At the same time, the environmental protection inspection team is stationed in Sichuan. Local short-process steel mills have temporarily suspended production one after another, causing iron ore prices to continue to fall. In terms of futures, the main iron ore 01 contract fell all the way, closing at 808 points, down 42.5 points from the previous day, and the port spot price fluctuated and fell.
At present, the Ferrous complex is still dominated by policies, and the production restriction policy has been implemented one after another. The output of molten iron is steadily declining, and there is still room for decline in the future. With the seasonal improvement in demand for thread and hot-rolled coil and the tightening of crude steel production restriction policies, iron ore supply and demand have begun to undergo a significant reversal. The supply and demand of iron ore has not deteriorated significantly in the short-term, but the expansion of the scope of production restriction will increase the pressure on iron ore in the future. The opportunity of initiating a short position of the distant futures contract of iron ore when price hits high is recommended. In addition, the hedging arbitrage combination of initiating a long position of thread and hot-rolled coil and a short position of iron ore is also recommended.
Unilateral: tend to be bearish in the medium term
Cross-species: initiate a long position of thread and hot-rolled coil (01 contract) and a short position of iron ore (01 contract)
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 continued to decline.
On August 31, the most-active RU contract closed at 13,845 (-30) yuan/ton, the price of mixed rubber reported 12,050 (0) yuan/ton, and the basis of most-active contract stood at -1195 yuan/ton (-20); the open interest of top 20 actively traded long positions was 90,473 (+704) lots, ,the short position was 132,924 (+224) lots, and the net short position was 42,451 (-480) lots.
On August 31, the most-active NR contract closed at 10,705 (-45) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,685 (-10) US dollars/ton, the SMR stood at 1,675 (-10) US dollars/ton, and the SIR figure was 1,640 (-5) US dollars/ton. The basis of most-active contract reported -98 (+13) yuan/ton.
As of August 27: the total inventory of domestic exchanges was 219,592 (+8,250) tons, and the amount of warehouse receipts of exchanges was 188,780 (+2,400) tons.
Raw materials: Sheet rubber 51.67 (+0.11), cup lump 45.2 (0), latex 48 (+0.2), RSS3 55.13 (+0.01).
As of August 26, the operating rate of domestic all-steel tire factories was 55.89% (-5.44%), and the operating rate of semi-steel tire factories was 57.65 (-0.36%).
Opinion: The price of rubber continued to fluctuate within a narrow range yesterday. The prices of raw materials had basically followed the market fluctuations, but their performance had remained relatively strong recently, which had caused the recent decline in profits from processing overseas RSS3. The fundamentals have not changed much recently, and weak domestic supply and demand have made the market to be mixed with longs and shorts. The continued decline in port inventory has also given support below the spot price, but the supply and demand drive was weak. Overseas demand was weak, and there was no obvious hindrance to the release of supply, but the high year-on-year price of raw materials may be a factor to be concerned about. In the short term, domestic and overseas demand is weak and stable, and prices are more likely to follow changes on the supply side. Rubber prices are expected to remain range-bound.
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: API crude oil inventories fell, while gasoline inventories increased.
The Port of Fourchon in Louisiana, the United States, was damaged after Hurricane Ida passed the border, which would result in a slower-than-expected recovery of crude oil production off the U.S. Gulf. Because the port is a sea-land connection point for crude oil such as Mars, it will affect the production operations of offshore platforms. As a result, the Mars crude oil discount has risen sharply. But overall, the magnitude of refinery shutdowns caused by power outages is still greater than the interruption of U.S. Gulf oil production. Therefore, from the perspective of the total amount, the overall impact of the hurricane on the supply and demand of U.S. Gulf crude oil is that demand loss is greater, and it will cause a structural shortage of some oil species such as Mars and other U.S. Gulf acid oil. At present, some refineries have been seeking to import acid oil to make up for the shortfall. On the other hand, the arbitrage window for exports from the US Gulf to Asia was closed due to the suspension of production of US Gulf acid oil such as Mars. Therefore, from a structural point of view, the hurricane will be more bullish to Brent and to be relatively bearish to WTI.
Strategy: neutral, go long of U.S. distillate oil crack spreads
Risk: The impact of the hurricane was less than expected.
Copper: The PMI of the manufacturing industry is lower than expected, and the inflation of industrial products is obviously suppressing domestic demand.
Spot: According to SMM, yesterday was the last trading day in August. The spot market transactions were slightly insipid, and the market price continued to stay above 70,000 yuan/ton, making downstream buying interest continued to be suppressed. In the morning session, Standard-Grade Copper initially quoted a premium of 190-200 yuan/ton for the next month contract, but there were few market transactions. Due to the demand for spot exchange at the end of the month, some holders quickly adjusted their quotations to a premium of 170-180 yuan/ton. However, there were still few inquirers in the market for buying and there was rarely a lot of buying interest in the market. It wasn't until after the second trading session that some of the sources with a quotation of a premium of 160 yuan/ton flowed out, and the market transactions picked up. High-Grade Copper also offered a premium of 220-230 yuan/ton in the morning session, but the market favor was limited. Subsequently, High-Grade Copper as a whole followed the price of Standard-Grade Copper and adjusted to a premium of 200 yuan/ton, but it was still difficult to see a large number of transactions. Hydro-Copper was difficult to find a large amount of supply. Under the guidance of a small amount of Norilsk and Mook copper quotations, the Hydro-Copper quotation reached a premium of 90-120 yuan/ton. Reluctantly downstream were more favoring unregistered brands in the market, resulting in few actual transactions.
Viewpoint: From a macro perspective, due to multiple factors such as the off-season of demand, domestic epidemics and floods, China's official manufacturing and non-manufacturing PMIs both fell to 18-month lows in August. The monthly decline of new export orders has significantly expanded. At the same time, the decline in the new order index was greater than that of the new export orders. It can be seen that the situation of industrial product inflation suppressing domestic demand is still obvious. In foreign countries, the Chicago PMI data in August fell short of expectations and was the lowest since June. The US consumer confidence index in August fell to its lowest level since February 2021. The data shows that the current economic situation in the United States is not yet optimistic. From a fundamental point of view, interference factors at the mine end have revived. BHP Billiton's Cerro Colorado copper mine union in Chile said on Monday that its members voted to reject BHP Billiton's latest contract offer, paving the way for the strike. In terms of inventory, LME inventory has substantially destocked 1,250 tons, the highest since July 21, and SHFE has continued to destock. At the end of the month, market demand was insipid, and the Back structure of the 09-10 contract expanded, prompting traders to increase their efforts to sell goods. The spot premiums and discounts of Shanghai Copper was lower than yesterday, and at the same time inhibited the transaction of imported copper. On the whole, the macroeconomic data is not as good as expected, and domestic industrial product inflation is obviously suppressing domestic demand. Unilaterally, we believe that the market will maintain a wide range of fluctuations and there are downside risks.
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: The port basis has strengthened.
Balance sheet outlook: Continue to accumulate inventory in September. Originally, October was the turning point for destocking, but under the assumption of Nanjing Chengzhi MTO's overhaul, the turning point for destocking may be postponed to November. Under the background of strong thermal coal and global natural gas, the Q4 expectation of the 01 contract is still strong.
(1) Unilateral: take a wait-and-see attitude.
(2) Intertemporal: For the 1-5 spread, it is recommended to take a wait-and-see attitude for the time being.
1. The cost support swing caused by the price fluctuation of raw thermal coal;
2. The postponement of the autumn inspection abroad;
3. Implementation of the MTO corporate overhaul plan.
策略：1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓
关注点：1. 美联储货币政策导向 2.美元指数走势 3.政策风险加剧