Iron Ore: Crude steel production has become more restrictive, and the weakness of iron ore is difficult to change.
Last week, iron ore continued to fall against the backdrop of tightening restrictions on crude steel production, closing at 732.5 points, down 53.5 points (-6.81%) from the previous week. In terms of spot, the lowest spot price of PB fines in the four ports was 955 yuan/ton, down 70 yuan/ton from last week; SSF reported 628 yuan/ton, down 57 yuan/ton from last week. The Platts Index was US$128.75, a drop of US$14.45 from last week. Basis contracted slightly on a week-on-week basis. As of last week, the basis of SSF corresponding to the iron ore 01 contract was 115.1 points, which was 9.137 points less than the previous week. The average weekly turnover of iron ore at the main port was 750,000 tons/day, a decrease of 180,000 tons/day from the previous week.
In terms of supply, the global iron ore shipped 32.374 million tons, an increase of 832,000 tons from the previous week; the total shipped iron ore from 19 ports in Australia and Brazil was 25.655 million tons, a decrease of 495,000 tons from the previous week; and the shipping volume from Australia was 17.972 million tons, a decrease of 0.5 million tons from the previous week; of which 15.323 million tons were sent from Australia to China, a decrease of 499,000 tons from the previous week; the shipment from Brazil was 7.683 million tons, an increase of 5,000 tons from the previous week. The total arrivals at 45 ports in China was 22.875 million tons, a decrease of 201,000 tons from the previous week; the total arrivals at the six northern ports was 10.267 million tons, a decrease of 2.431 million tons from the previous month. Given the good weather, the supply side showed a loose pattern last week. The southeast coast of China will be affected by Typhoon Candu next week, which may lead to a decrease in the delivery and arrival of iron ore in the short term.
In terms of demand, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 73.57%, a decrease of 0.65% from last week and a year-on-year decrease of 17.32%; blast furnace ironmaking capacity utilization rate was 84.77%, a month-on-month decrease of 0.68%, and a year-on-year decrease of 9.55%; the profit rate of steel mills was 88.74%, a month-on-month increase of 0.43%, and a year-on-year decrease of 6.06%; the average daily molten iron output was 2.2563 million tons, a month-on-month decrease of 18,100 tons, and a year-on-year decrease of 254,100 tons. Mysteel surveyed 163 steel mills with a blast furnace operating rate of 56.49%, a decrease of 0.14% month-on-month; a capacity utilization rate of 68.08%, a month-on-month decrease of 0.87%; a utilization rate excluding the eliminated capacity was 74.11%, a decrease of 10.75% from the same period last year, and the profit rate of steel mills was 77.91%, an increase of 0.61 month-on-month. Affected by the continuous advancement of crude steel production restrictions, the demand side of iron ore continued to decrease, and the iron ore was operating weakly.
In terms of inventory, Mysteel counted 13035.2 imported iron ore inventories in 45 ports across China, a month-on-month drop of 63.95; the average daily port congestion volume of 283.26 dropped by 8.42. Australian mines 6481.58 fell 49.6, Brazil mines 3854.16 increased 42.7, trade ore 7476.9 fell 7.2, pellets 418.3 fell 0.31, iron ore concentrates 1126.09 increased 47.68, lump ore 2036.59 fell 3.17, coarse iron powder 9454.22 fell 108.15. There are 185 ships in port, an increase of 12. Last week's port inventory exceeded 6 million tons from the beginning of the year, which was at the historical median level in the past five years, mainly due to the accumulation of low-grade non-mainstream iron ore inventory. As the global delivery of iron ore this year was significantly lower than expected at the beginning of the year, the current performance of the current iron ore inventory accumulation is also lower than expected due to the reduction in demand for crude steel production restrictions.
On the whole, under the strong pressure of the national crude steel production restriction policy in the second half of the year, iron ore prices are unlikely to have a strong performance. From the perspective of the lengthening of the cycle, due to the global promotion of low-carbon and green environmental protection, the carbon element industry chain bears the brunt of the suppression. The restrictions on high energy-consuming and high-carbon industries have increased and a full range of industrial transformation and upgrading has begun, and the steel smelting is also vigorously advocating to increase the use and investment of electric furnaces. In this context, the expansion of the blast furnace ironmaking end will be difficult to sustain.
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 the price hits high
Concerns and risks:
1. The intensity of production restriction at the thread and hot-rolled coil end;
2. Inventory replenishment for Mid-Autumn Festival and National Day;
3. Shipping data may change drastically;
4. The epidemic may aggravate and so on.
Rubber: The downstream maintains rigid demand and the price of rubber is expected to be repaired slightly.
Last week, rubber futures prices fell first and then rose. Driven by funds, prices fell sharply in the first half of last week, but the real fundamentals did not change much. Therefore, prices had been repaired in the second half of last week.
The total inventory of domestic exchanges as of September 10 was 232,180 tons (+6826), and the amount of futures warehouse receipts was 198,470 tons (+5990). Due to the domestic rubber delivery season, especially the release of output in the main producing areas of Yunnan, the recent stock exchange growth rate has continued to increase. As of September 3, the inventory in the 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 September 9, the operating rate of all-steel tire companies was 41.2% (-8.88%), and the operating rate of semi-steel tire companies was 39.48 (-15.04%). 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. However, due to the economic downturn at home and abroad, the overall improvement is limited, and we have to wait for the end of domestic environmental protection inspections.
Viewpoint: Recently, due to the sharp drop in market prices, arbitrage orders have been leaving the market one after another. The contraction of futures and spot prices is more obvious, which may partly reflect the relative strength of spot prices. With the exit of the arbitrage orders, the short force in the futures market has also weakened, bringing about a restoration of prices last weekend. At present, domestic supply is gradually picking up, and demand has to wait for the end of domestic downstream environmental protection inspections. However, with the advent of the domestic long holiday, under the background of low raw materials in tire factories, there will be actions to replenish inventory in the future, which will bring about a rebound in the demand for raw materials. However, a large demand rebound will have to wait for a substantial decrease in the inventory of finished products in tire factories. Therefore, the price may show a slight repair pattern in the short-term, and it is recommended to participate in the short-term.
Strategy: cautiously bullish, participate in the short term
Risk points: domestic supply may increase substantially; demand may continue to weaken due to the epidemic and other impacts; funds may be tight.
Crude oil: China's release of SPR may have limited negative impact on oil prices.
Last week, China rarely released its strategic reserves in batches through official media announcements to achieve the purpose of stabilizing oil prices. Some market views interpret this as it will suppress China's crude oil purchase demand, which is therefore negative for oil prices. But we think that is not the case. The announcement of the news is not bearish for oil prices, but may be bullish for oil prices. The reason is the following:
1. The release of SPR confirms that refineries have strong demand for replenishment, but commercial crude oil inventories and refineries' own inventories have fallen to a low point, which is equivalent to the current domestic inventory replenishment method only leaving SPR. However, due to its own characteristics of ensuring energy security, SPR cannot be continuously released on a large scale. Therefore, it can only alleviate the short-term procurement needs of some refineries, so the rigid demand brought by the large refining and chemical operations cannot be suppressed.
2. In order to stabilize oil prices this year, relevant policies have been intensively introduced, including reduction of crude oil import quotas and refined oil export quotas, inspections of import quotas for local refining and reselling, tax evasion, and the collection of consumption taxes on LCO and mixed aromatics. The official announcement of SPR is equivalent to the final policy card. Although it may mean that the fourth batch of crude oil quotas issued in the future will also be reduced, the current bearish policy is equivalent to the price in, and the policy tools and space available in the future are already very limited.
3.Since this official announcement did not announce the details of the release of reserves, including the time and amount of release, the market still has many questions about the specific circumstances of this release of reserves. There is even a view that this announcement is the July reserve dumping behavior that has already occurred.
Therefore, in summary, we believe that the official announcement of the release of reserves will not necessarily cause a significant negative impact for oil prices. Instead, it confirms that the current demand for replenishment of Chinese refineries is very strong. We believe that China's crude oil buying interest has bottomed out, and the pace of gradual release with the issuance of quotas will remain unchanged in the future.
Strategy: Unilaterally neutral, go long of U.S. distillate oil crack spreads
Risk: The impact of the hurricane was less than expected.
Copper: The domestic macroeconomic impact is bearish, but the fundamentals are still supported.
Spot situation: According to SMM news, the average price of SMM 1# Copper Cathode in the week of September 10 was operating at 68,760-70,000 yuan/ton, and showed a trend of first decline and then rise in the middle of the week. The average premium and discount quotations of Standard-Grade Copper ran from 15 yuan/ton to 115 yuan/ton, with large fluctuations in the middle of the week. After falling to the lowest point of the week on September 7th, it rebounded from September 8th to 10th. Last week, copper prices pulled up in the second half of the week. The Shanghai Copper 10 contract rose from a minimum of 68,270 yuan to a maximum of 71,630 yuan/ton. It closed at 71,430 yuan/ton on Friday night, a weekly increase of 2,000 yuan/ton.
Short-term view: From a macro perspective, the European Central Bank's interest rate meeting held on Thursday kept the three key interest rates unchanged, in line with market expectations. In addition, the European Central Bank kept the asset purchase plan (APP) debt purchase rate unchanged at 20 billion euros per month and slowed down the fourth quarter's emergency debt purchase plan (PEPP). The impact of this meeting on interest rates on the market is relatively limited. From the week of September 4 to September 4, the number of initial claims for unemployment benefits hit a record low since the week of March 14, 2020, which improved the pessimism that the previous non-agricultural data was substantially lower than expected. However, since the US federal government ended the New Crown Relief Act on September 6, it is judged that the impact of this data is limited. The U.S. August PPI was higher than expected, and inflationary pressures are still present. Domestically, CPI, PPI and social financial data are released. The overall social financial data is neutral, the CPI weakened slightly, and the PPI hit the highest value since the financial crisis. The PPI-CPI scissors gap is the highest in history, economic structural contradictions have been amplified, and downward pressure on the economy has increased.
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: 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: The market has entered the inventory accumulation cycle, and processing fees have fallen.
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, and the accumulating pressure in October will not be great. The Asian PX balance sheet was slightly destocked in September, and there was a slight inventory accumulation expectation in October-November.
(1) Unilateral: Initiate a long position when the price hits low. Under the background of rising coal chemical industry, PTA has nothing to do with coal; and under the background of short-term inventory accumulation cycle, it is hedged by funds and was allocated by initiating short positions, therefore PTA valuation has declined.
(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：谨慎看多 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓