Iron Ore: Market sentiment dropped to freezing point and iron ore prices fell sharply.
Yesterday, the iron ore 01 contract fell sharply, and the closing price was 731, which was 46 yuan/ton lower than the previous value. Spot prices followed the decline, with a cumulative drop of 15-25 yuan/ton throughout the day.
On the supply side, global iron ore shipments this week decreased by 5.49 million tons from the previous month. 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 to near the cost line of some non-mainstream ore. If the price of ore continues to fall, it may cause some reductions, and the enthusiasm of domestic ore production will also be affected, so the overall supply of iron ore will increase slowly.
On the demand side, the national production restriction policy has been steadily advancing, resulting in a continuous decline in molten iron output, and some steel plants have restocked after the holiday. Yesterday, the Ministry of Industry and Information Technology issued a notice on launching staggered production in the steel industry in the heating season of 2021-2022 in Beijing-Tianjin-Hebei and surrounding areas, stating that it will further suppress 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, 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
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: The price of raw materials is firm due to the impact of rainfall.
On October 13, the most-active RU contract closed at 14,435 (-350) yuan/ton, the price of mixed rubber reported 12,500 (-175) yuan/ton, and the basis of most-active contract stood at -860 yuan/ton (-200); the open interest of top 20 actively traded long positions was 85,955 (-2,111) lots, the short position was 121,971 (-5,744) lots, and the net short position was 36,016 (-3,633) lots.
On October 13, the most-active NR contract closed at 11,560 (-400) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,750 (-55) US dollars/ton, the SMR stood at 1,745 (-50) US dollars/ton, and the SIR figure was 1,715 (-40) US dollars/ton. The basis of most-active contract reported -479 (+170) 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: The market is closed and no quotation is currently available. Sheet rubber 53.15 (0), cup lump 48.25 (0), latex 52 (0), RSS3 56.22 (0).
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: Driven by the market sentiment, the price of rubber fluctuated sharply yesterday. The impact of typhoon weather in major production areas at home and abroad has brought about a short-term slowdown in supply, making rubber prices strong. After the typhoon passes, supply is expected to resume. From a seasonal perspective, the end of October in China will usher in a turning point in port inventory accumulation. Therefore, at the current price, the upper space may be relatively limited, unless the influence of the supply side is further increased, which further aggravates the shortage of domestic spot supply. Because the rain in Thailand's main production areas has not yet completely ended, short-term overseas production is unlikely to rebound significantly. In addition, there are not many stocks in the port of Thailand. Therefore, the price comparison is still supported by the supply side. We expect that prices will enter a turbulent trend. It is recommended to take a wait-and-see attitude for the time being.
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: API crude oil inventories increased more than expected.
China's removal of electricity price controls in some provinces will help ease the problem of electricity curtailment in some regions. However, considering that the domestic coal shortage is still difficult to completely resolve in the near future, the power shortage will continue, and high electricity prices may continue to stimulate some factories to switch to diesel generators for power generation. Of course, due to the increase in diesel prices, the economy of diesel generators has also been damaged to some extent. However, in the case of unstable power supply and rising power prices, diesel power generation is still the most feasible alternative power generation plan. We believe that diesel is still the most beneficial product in this round of energy crisis.
Strategy: Unilaterally cautiously bullish, go long of U.S. distillate oil crack spreads
Risk: The United States may substantially release its strategic crude oil reserves.
Copper: US inflation data has exceeded expectations, and copper price volatility has intensified.
Spot: According to SMM, the spot market finally failed to hold the premium and turned into a discount range. In the morning session, inter-month BACK was still in the range of 280-320 yuan/ton, and holders tried to maintain the quotation of a premium of 10-20 yuan/ton. High-Grade Copper was quoted at a premium of around 50 yuan/ton, but the spread of around 300 yuan/ton made it difficult for buyers to enter the market. Holders have a strong willingness to exchange spot before delivery. As the spread expanded to the 350-400 yuan/ton range, the holders took the initiative to lower the quotation of a discount of 10-20 yuan/ton for spot exchange. Since imported copper has flowed into the domestic market, high-purity supplies from Peru, ENM, and Jinchuan have all flowed out of the market, and the willingness to exchange spot was stronger. As a result, the price of High-Grade Copper was infinitely close to that of Standard-Grade Copper, and there was almost no price difference. The price has reached a discount of 10 yuan/ton at the end of the afternoon session. Hydro-Copper has dropped to a discount of more than 100 yuan/ton under the quotations of brands such as NORLISK and MV, and the downstream maintains just-need purchase demand at a discount of more than 120 yuan/ton.
Viewpoint: On the macro front, the minutes of the Fed’s September FOMC meeting were announced. According to estimates by Fed officials, if Taper is announced at the November meeting, it may start operations in mid-November or mid-December, and many people prefer faster Taper. The minutes mentioned that all participants unanimously agreed that it would be appropriate to state this in the resolutions announced after the meeting: If progress continues as expected, the pace of adjusting the purchase of assets may soon be guaranteed. At the same time, many people pointed out that there is a risk that high inflation will last longer. Judging from the data released yesterday, the US CPI has risen for 16 consecutive months. In September, the CPI rose by 5.4% year-on-year, exceeding market expectations by 5.3%. For the fifth consecutive month, it increased by more than 5% year-on-year, the highest level since July 2008. In September, the core CPI rose 4% year-on-year, in line with expectations. As the market's concerns about inflation intensify, according to the implicit interest rate in the federal funds rate futures, the current market expects that the probability of the Federal Reserve raising interest rates in September next year is as high as 90%. On the domestic front, China's September increase in the scale of social financing and new RMB loans continued to maintain the strong growth rate in August, and the M2-M1 scissors gap has been expanding for five consecutive months.
On the whole, US inflation data has increased more than expected, and copper price volatility has intensified.
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: During the reopening of Yisheng, the PTA processing fee has been further reduced.
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