Iron Ore: Steel mills replenish inventory after the holiday, and iron ore prices rebounded.
Yesterday, the Iron Ore 01 contract continued its rebound trend, closing at 797.5, an increase of 48.5 yuan/ton from the previous day. Spot market prices also rose significantly, steel mills continued to restock after the holiday, and the overall performance was relatively active. The mainstream varieties rose 15-30 yuan/ton, and the transaction volume increased.
On the supply side, iron ore shipments this week saw a larger drop compared to the previous period. Among them, the global iron ore shipment totaled 30.03 million tons, a decrease of 5.49 million tons from the previous month. Shipments in Australia and Brazil fell by 3.31 million tons, while shipments in the remaining countries fell by 2.18 million tons. The overall iron ore shipment volume fell short of expectations and was lower than the level of the same period last year. At the same time, due to the high sea freight rate and the iron ore discount, the current ore price has fallen close to the cost line of some non-mainstream ore. If the price of ore continues to fall or will cause a partial reduction, and the enthusiasm for domestic ore production is also affected, the overall supply of iron ore will increase slowly.
On the demand side, the national production restriction policy has been steadily advanced, resulting in a continuous decline in molten iron output. Taking into account that the production limit will be completed in advance to the end of November, this may cause a decline in domestic iron ore consumption. In the future, steel smelting will still be subject to the dual restrictions of staggered production during the heating season and the Winter Olympics, making it difficult for domestic iron ore consumption to increase.
On the whole, the shipment volume of iron ore fell short of expectations, and the recent sharp increase in ocean freight has also increased the landed cost of iron ore. However, considering the steady advancement of national crude steel production restrictions and requiring companies to complete the reduction task by November, domestic iron ore consumption has been suppressed. The price of iron ore is expected to maintain a slight fluctuation, and a wait-and-see attitude is recommended.
Cross-species: initiate a long position of thread and hot-rolled coil and a short position of iron ore
Spot-Futures Arbitrage: None
Concerns and risks:
1. The implementation strength and extent of the crude steel production restriction policy;
2. The risk of rising ocean freight.
Rubber: The price of raw materials in Thailand continued to rise under the influence of rainfall.
On October 11, the most-active RU contract closed at 14,775 (+380) yuan/ton, the price of mixed rubber reported 12,625 (+150) yuan/ton, and the basis of most-active contract stood at -900 yuan/ton (+70); the open interest of top 20 actively traded long positions was 85,378 (+7,964) lots, the short position was 123,519 (+6,464) lots, and the net short position was 38,141 (-1,500) lots.
On October 11, the most-active NR contract closed at 11,935 (+380) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,805 (+55) US dollars/ton, the SMR stood at 1,795 (+50) US dollars/ton, and the SIR figure was 1,755 (+35) US dollars/ton. The basis of most-active contract reported -619 (-176) yuan/ton.
As of October 8: the total inventory of domestic exchanges was 247,859 (+4,578) tons, and the amount of warehouse receipts of exchanges was 202,360 (+660) tons.
Raw materials: Sheet rubber 52.19 (+1.79), cup lump 48 (+0.85), latex 51 (+2), RSS3 55.65 (+1.76).
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: The price of rubber continued to be strong yesterday, mainly due to the promotion of the commodity market sentiment and the limited output caused by flooding in Thailand's main producing areas. The current trading logic of rubber prices is mainly on the supply side. Due to the impact of the typhoon in the main producing areas of Hainan, short-term rubber delivery has also been suppressed to a certain extent. The drop in ocean freight during the holiday also eased the concerns of domestic tire export demand, and the pessimistic expectations on the demand side were basically released before the holiday. Therefore, the current rubber is at a relatively favorable time point, and the price is expected to continue to fluctuate strongly.
Strategy: cautiously bullish
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: The market is concerned about the demand for natural gas substitution, and the trend of oil prices is still strong.
In terms of high-frequency mobility data, from the perspective of the three alternative traffic mobility data of TomTom, Apple and Google, the recent recovery trend of global traffic consumption has slowed down. TomTom data shows that the recovery of traffic in other regions except Europe has basically stagnated since September. On the contrary, the European traffic congestion index recovered to around 120% in early October, the highest level at the end of the year. China's congestion index declined due to the National Holidays, while other regions showed little change. In terms of aviation consumption, the number of global flights rose slightly to a previous high. However, from a structural point of view, the number of European and American flights has basically remained stable, with growth mainly coming from the Asia-Pacific region and other developing regions. However, these areas are still being restrained by the epidemic, and the recovery of jet fuel consumption in the future will still be difficult. After the recovery in Europe and America is nearing the top, the recovery of global consumption will slow down. Despite this, the current market is more concerned about the contradiction between natural gas alternative consumption and limited supply elasticity. Oil prices are expected to remain strong in the near future.
Strategy: Cautiously bullish, go long of U.S. distillate oil crack spreads
Risk: The United States may substantially release its strategic crude oil reserves.
Copper: Multiple factors have pushed copper prices higher.
In terms of spot: According to SMM news, the spot market's premiums and discounts show a trend of opening higher and lowering later. Holders have a strong willingness to exchange spot under the high BACK structure, but the downstream has no intention of actively buying interest after they just need to replenish the inventory on the first day after the holiday, resulting in weak transactions. Traders have no intention of entering the market even under the spread of the market BACK, which leads to serious panic about high prices. There are only a few days left before the settlement, the Shanghai-London ratio is revised up after the holiday, the import window opens, and the transaction price of Yangshan Copper rises. Recently imported copper may significantly increase the concentration of arrivals, and the pattern of high premiums is unlikely to be sustainable. If the BACK structure still exists, and it is constantly narrowing, the exchange for spot and lowering of premiums will continue within this week.
Viewpoint: The copper price in the day trading rose yesterday, and the copper price in the night trading continued to perform strongly. On the macro front, the Bank of England hinted that an interest rate hike is imminent, and the money market expects the Bank of England to raise interest rates by 15 basis points at its December 2021 meeting. According to the analysis of JP Morgan Chase, although the September non-agricultural employment report is relatively weak, it will not shake the Fed's reduction process. The Fed is expected to announce its debt reduction at its meeting next month and begin raising short-term interest rates before the end of next year. In the context of recent supply shortages, rising energy prices and increasing inflation, the Citigroup Global Economic Surprise Index has now turned negative and has fallen to a level that has historically indicated an economic slowdown. At the same time, the Citigroup Global Inflation Surprise Index soared to its highest level since records began in 1999. Domestically, Premier Li Keqiang presided over a meeting of the National Energy Commission to ensure stable energy supply and safety, and strengthen the ability to support green development.
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: Short-term overhauls increase, and processing costs are firm.
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.
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