Iron Ore: The overseas transactions were insipid, and the seaborne prices increased.
In terms of spot, there was basically no transaction in port spot during the National Day. There was no outstanding performance in overseas markets during the holidays, and overseas swaps were in a state of narrow fluctuations. The market is optimistic about replenishment of stocks by steel mills after the holiday, but long-term expectations are still fluctuating, and confidence in the strengthening of iron ore is weak. Although the spot market for iron ore during holidays is relatively insipid, and ocean freight rates have continued to rise. As of October 6, the C3 freight rate from Tubarao, Brazil to Qingdao, China rose from approximately US$45.4/ton before the holiday to approximately US$49.5/ton, an increase of approximately 9.03%. The C5 freight rate from Port Hedland, Australia to Qingdao, China rose from US$22.5/ton to US$23.5/ton, an increase of about 4.44%.
On the whole, on the supply side, the total iron ore supply in 2021 will increase steadily. On the consumer side, China's production reduction will continue to advance steadily, and the production reduction will be completed by the end of November, which will inevitably lead to a further decline in domestic iron ore consumption. After a substantial and effective drop in iron ore prices, the marginal supply has basically been suppressed. However, the sea freight rate has risen sharply recently, which has also increased the landed price. Mainstream ores are still at a low level, coupled with pre-holiday replenishment of inventory requirements, iron ore rebounded significantly. However, considering the tightening of crude steel production restrictions in the fourth quarter, iron ore has limited room for upward rebound and will remain fluctuating at low levels.
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 when the price hits high
Concerns and risks:
1. The intensity of production restriction at the thread and hot-rolled coil end;
2. The impact of typhoon weather;
3. Inventory replenishment on National Day;
4. The epidemic may aggravate and so on.
Rubber: Spot stocks are tight, and futures prices fluctuate strongly.
On September 30, the most-active RU contract closed at 14,190 (+375) yuan/ton, the price of mixed rubber reported 12,275 (+100) yuan/ton, and the basis of most-active contract stood at -915 yuan/ton (-25); the open interest of top 20 actively traded long positions was 71,788 (+331) lots, the short position was 109,702 (-168) lots, and the net short position was 37,914 (-499) lots.
On September 30, the most-active NR contract closed at 11,390 (+250) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,725 (+10) US dollars/ton, the SMR stood at 1,720 (+15) US dollars/ton, and the SIR figure was 1,705 (+10) US dollars/ton. The basis of most-active contract reported -332 (-152) yuan/ton.
As of September 30: the total inventory of domestic exchanges was 243,281 (+4,110) tons, and the amount of warehouse receipts of exchanges was 201,700 (+1,900) tons.
Raw materials: As of September 30, Sheet rubber 49.90 (0), cup lump 45.75 (+0.5), latex 49.3 (+1), RSS3 52.72 (+0.19).
As of September 30, the operating rate of domestic all-steel tire factories was 53.86% (-1.9%), and the operating rate of semi-steel tire factories was 50.06% (-2.5%).
Opinion: During the National Day holiday, the price of Japanese rubber fluctuated and rose by less than 3%. At the moment when the market focuses on supply, it may indicate that the supply side has not changed significantly during the holiday period. During the holiday period, domestic heavy-duty truck sales data for September continued to be weak. In September, the sales volume of heavy trucks is expected to be around 60,000, up 17% month-on-month and down 60% year-on-year, setting a new low for the same period in the past five years. This is mainly related to the domestic economic downturn and the real estate downturn. Before the holiday, domestic market prices were firm, mainly due to the exit of arbitrage orders and the basic reflection of bearish demand of the market. Judging from the current fundamentals, it is difficult to see the market conditions in the same period last year. Mainly because the domestic demand is lower than the same period last year, and the supply side does not have the same conditions as the same period last year. Although the domestic spot is relatively tight at present, due to the declining demand for thick latex and the normal release of domestic raw materials, it is difficult for RU warehouse receipts to appear tight. Entering October, due to the peak season for overseas snow tires, the operating rate of domestic tire factories is expected to rebound again. However, there are still rains in major producing areas such as Thailand, and it is expected that short-term supply will not be released in large quantities. Coupled with the impact of logistics delays, it is expected that the domestic spot supply tight situation can be maintained. Therefore, the rubber price is expected to rebound in October, but it is difficult to have a sustained rise in the market. It is recommended to treat it with caution.
Strategy: cautiously bullish
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: OPEC maintained its production increase plan unchanged, and oil price fluctuations increased.
OPEC maintained its original plan at the October 4 meeting and did not further increase production. From the perspective of OPEC's behavior, it does not want to maintain the price ceiling. On the contrary, OPEC still hopes to maximize short-term benefits, that is, rising oil prices will increase oil revenue. However, in the medium to long term, this will stimulate the development of new energy sources and accelerate the resumption of U.S. shale oil production. However, OPEC chose the former between short-term benefits and long-term benefits, which made the price elasticity of oil supply very limited during the year. On the other hand, the inflationary pressure brought about by rising oil prices cannot be ignored, especially in the United States and China, the world's largest oil consumers. The United States said it still has many countermeasures, including measures such as releasing strategic reserves and banning crude oil exports. In addition, the current energy crisis situation may also speed up the process of Iran's nuclear talks. For China, it may further release strategic reserves or reduce import quotas to curb imports. We believe that after the oil price breaks through US$80/barrel, the resistance of consumer countries will become more intense, which will allow the oil market to enter a stage of fundamental and policy game, and the volatility will increase significantly.
Strategy: Unilaterally cautiously bullsih, go long of U.S. distillate oil crack spreads
Risk: Iranian oil returned to the market earlier than expected.
PTA: Pre-holiday polyester yarn inventory pressure eased, and PX rose slightly during holidays.
Balance sheet outlook: PTA is still expected to accumulate inventory from October to November under the background of implementation of overhaul; the Asian PX balance sheet is expected to continue to accumulate inventory slightly from October to November.
(1) Unilateral: Processing fees have rebounded, and it is recommended to 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.
Risks: PTA factory's control over the maintenance rhythm; the load situation of Zhejiang Petrochemical PX; the maintenance time of polyester reduced load.