Iron Ore: The production restriction policy has become stricter, and iron ore continues its downward trend.
The policy of restricting crude steel production has been further deepened recently. Guangxi province has strengthened the dual control of energy consumption and imposed production restrictions on local steel companies, and some companies have reduced their output by 20%. Environmental protection inspection teams stationed in Sichuan and Guangdong, and local short-process steel mills have temporarily suspended production one after another. At the same time, the environmental protection inspection team inspected in Shandong, and all steel plants strictly followed the production limit. According to feedback from steel mills, senior executives are not satisfied with the progress of the steel mill's production restriction. All provinces are required to complete the annual production limit target as far as possible before the end of November. In December, a centralized assessment will be conducted to check for omissions, which has caused iron ore prices to continue to fall. In terms of futures, the main iron ore 01 contract fell all the way, closing at 765 points, down 64.5 points from the previous day. The port spot fluctuated and fell, with a cumulative drop of 10-50 throughout the day.
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: The supply and demand are weak, and the price of rubber may continue to be weak.
On September 1, the most-active RU contract closed at 13,845 (0) yuan/ton, the price of mixed rubber reported 12,050 (0) yuan/ton, and the basis of most-active contract stood at -1245 yuan/ton (-50); the open interest of top 20 actively traded long positions was 90,623 (+150) lots, ,the short position was 132,641 (-283) lots, and the net short position was 42,018 (-433) lots.
On September 1, the most-active NR contract closed at 10,715 (+10) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,685 (0) US dollars/ton, the SMR stood at 1,675 (0) US dollars/ton, and the SIR figure was 1,635 (-5) US dollars/ton. The basis of most-active contract reported -140 (-42) 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), cup lump 44.8 (-0.4), latex 48.30 (+0.3), RSS3 55.13 (0).
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 remained weak yesterday, and the price has fluctuated within a narrow range in the last two days. From a fundamental point of view, following the previous sharp drop, the contradiction between supply and demand is not prominent. Raw material prices basically follow market fluctuations, and the price of raw materials in Thailand presented a mix of gains and losses yesterday. Raw material prices have continued to decline recently, but they are still at a relatively high level year-on-year. In addition, domestic port inventories continued to decline, giving support to rubber prices in the short term. Although inventories of the exchange are at a low level year-on-year, due to the peak domestic supply season, the demand for latex is lower than last year, which will lead to a month-on-month rebound in warehouse receipts. The downward pressure on the domestic and international economy has weakened demand, and the overall supply and demand drive has been weak. It is expected that rubber prices will remain weak.
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: OPEC still sticks to its original plan to increase production.
Yesterday, the OPEC meeting continued to increase production according to the original plan, increasing crude oil production by 400,000 barrels per day each month. Previously, the market expected OPEC to postpone its production increase due to the recent epidemic and the drop in oil prices. But at present, OPEC believes that the impact of the epidemic on demand is relatively limited, and it has not yet reached the point where it needs to adjust its production increase plan. In addition, the United States also appealed to OPEC that it does not want excessive oil prices to push up inflation. Judging from the current balance sheet, according to OPEC's current pace of production increase, the third quarter is the period with the largest gap between supply and demand in the market. The supply and demand gap will narrow in the fourth quarter, and supply and demand will turn into a slight surplus next year. For the current balance sheet, the biggest variable on the supply side in the future will still come from the pace of the return of Iranian oil and the speed at which US crude oil production resumes.
Strategy: Unilaterally neutral, go long of U.S. distillate oil crack spreads
Risk: The impact of the hurricane was less than expected.
Copper: Economic data was generally worse than expected, and copper prices fell temporarily under pressure.
Spot: According to SMM, yesterday's spot market transactions were still relatively insipid, and buyers and sellers remained divergent on prices. Standard-Grade Copper was quoted at a premium of 200 yuan/ton in the morning session. Holders wanted to maintain high prices, but there were very few inquiries for buying. In addition, yesterday was the third time that the State Reserve Bureau released reserves. Some downstream players participated in the reserve release auction, so it was difficult to see a large amount of buying in the market. It wasn't until some holders slightly adjusted their quotations to a premium of 180-190 yuan/ton that the transaction improved slightly. High-Grade Copper was quoted at a premium of 190-210 yuan/ton under the guidance of the Peruvian and CCC-P quotations, and it was difficult to see the spread between it and Standard-Grade Copper. Only Guixi Copper maintained the price supporting sentiment because it is still under maintenance, but the market had limited buying power, resulting in few transactions. Hydro-Copper was still quoted at a premium of 80-120 yuan/ton under the guidance of a small amount of Norilsk, BL and other brands. When the overall supply of goods in the market was relatively scarce, both buyers and sellers are more cautious and maintain a wait-and-see attitude.
Viewpoint: The price of copper fell sharply in the day session yesterday, and the market showed that the bulls lightened their holding positions and left the market. At night, dragged down by the LME copper, the market opened lower and continued to be in a downturn. On the macro level, Premier Li Keqiang convened an executive meeting of the State Council. He called for cross-cyclical adjustments and the role of local government special bonds to drive the expansion of effective investment. The current progress of the issuance of special bonds is significantly lower than in previous years, and the post-financial characteristics are obvious. The number of U.S. ADP employment in August announced overnight was 374,000, which was significantly lower than expected, indicating a slowdown in the recovery of the labor market. A number of recent economic data fell short of expectations, and the current pace of economic recovery in the United States is under pressure. From a fundamental perspective, on the mining side, the Chilean Senate Mining Committee voted 3 to 2 to pass the much-watched mining tax bill, which will then enter the parliamentary debate stage. As the bill will result in a substantial increase in the actual tax rate, the industry has been warning that this will affect the country's mining investment. In terms of releasing reserves, in 2021, the third batch of national reserves of copper has been complete all batches of auctions, and the highest transaction prices in various regions are generally lower than the market price of the day by about 1300-1500 yuan/ton. The State Reserve Bureau will continue to carry out follow-up releases based on market supply and demand and price trends. In terms of inventory, LME destocked for three consecutive days, and SHFE continued to destock. At the beginning of the month, the spot premiums and discounts of Shanghai copper and South China copper rose slightly from yesterday, and the Back structure of the 09-10 contract expanded. However, affected by the release of reserves, both buyers and sellers maintain a cautious wait-and-see attitude at the current prices. On the whole, under the instructions of the central government the day before yesterday, the copper price could hardly withstand the downward trend on the day of the release of reserves. The current domestic and international economic data show that the situation is not optimistic. Unilaterally, we expect that the market will maintain wide 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: Processing fees are still weak, and the market will gradually usher in a slight inventory accumulation cycle in the future.
Balance sheet outlook: In the context of continuous filament maintenance, the PTA September balance sheet ushered in the first inflection point of the inventory accumulation, but the accumulation rate is controllable. In September, the Asian PX balance sheet accumulated only a small amount of inventory.
(1) Unilateral: Initiate a long position when the price hits low, PTA and PX processing fees have limited room for further reduction..
(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
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