Iron Ore: Spot transactions improved and the market rebounded sharply.
Viewpoint and logic:
Yesterday, black series products rebounded sharply. After the main iron ore contract opened higher at night, it continued to rebound within the day. It had risen by 8.53% at the highest, and finally closed at 570.5 yuan/ton, an increase of 6.84%. In terms of spot, the port spot price of imported iron ore rose slightly in the afternoon, with a cumulative increase of 5-30 yuan/WT throughout the day. Qingdao Port PB fines reported 625 yuan/ WT, and SSF 400-405 yuan/ WT.
On the demand side, the capacity utilization rate of long-process steel plants in Anhui Province this week decreased by 9% from the previous week, and the output of molten iron from the construction steel sample steel plants in Northeast China decreased by 16,000 tons from the previous week. Due to losses, individual steel mills actively curtailed their production plans. Due to the relaxation of production restrictions in Tangshan, the capacity utilization rate this week was 59.25%, an increase of 3.07% from the previous week. In terms of inventory, the total inventory of 45 ports this week once again stood above the 150 million tons, an increase of 3.02 million tons from the previous week. In the downstream, the balance sheet demand of thread increased by 156,400 tons, and the social warehouse is reduced by 316,700 tons. Demand has picked up slightly and market sentiment has picked up.
On the whole, iron ore port inventory remains high, and high supply pressure is difficult to change in the short term. However, the rebound in steel prices may increase steel mills' production enthusiasm and willingness to replenish inventories, and may provide certain support to iron ore prices in the short term. In addition, recent market rumors that the policy side may release a signal of loose margins on real estate, which has changed the pessimistic expectations of real estate, and the introduction of specific policies needs to be focused on.
Spot-Futures Arbitrage: None
Concerns and risks:
1. The implementation strength and scope of the crude steel production restriction policy.
2. Risk of rising sea freight, etc.
Rubber: The market sentiment turns warmer, and the price of rubber fluctuates.
On November 11, the most-active RU contract closed at 14,145 (+65) yuan/ton, the price of mixed rubber reported 12,575 (+75) yuan/ton, and the basis of most-active contract stood at -945 yuan/ton (+35); the open interest of top 20 actively traded long positions was 68,514 (-1,374) lots, the short position was 93,077 (+183) lots, and the net short position was 24,563 (+1,557) lots.
On November 11, the most-active NR contract closed at 11,175 (+100) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,735 (0) US dollars/ton, the SMR stood at 1,725 (0) US dollars/ton, and the SIR figure was 1,680 (0) US dollars/ton. The basis of most-active contract reported -399 (-67) yuan/ton.
As of November 5: the total inventory of domestic exchanges was 297,456 (+12,243) tons, and the amount of warehouse receipts of exchanges was 242,250 (+21,930) tons.
Raw materials: Sheet rubber 52.85 (+0.18), cup lump 47.65 (+0.2), latex 52 (+0.2), RSS3 56.18 (+0.23).
As of November 4, the operating rate of domestic all-steel tire factories was 61% (+2.57%), and the operating rate of semi-steel tire factories was 56.48% (+1.61%).
Opinion: Due to the news that the domestic real estate market is expected to relax, the commodity market atmosphere has turned warmer, which has supported the price of rubber. The current contradiction between supply and demand of rubber is still on the supply side. In the early stage, the market expected that domestic arrivals would ease with the decline in ocean freight rates. However, at present, the domestic arrivals have not increased significantly, and it is expected that the impact of logistics on the shipping schedule will continue for a long time, and the domestic arrivals pressure will hardly appear in the short term. Under the support of domestic raw material costs, prices are expected to have limited room for continued adjustment, but the upward drive is weaker due to the drag on the demand side. The short-term upward pressure is expected to be near the import arbitrage window. Before the supply has undergone major changes, it is recommended to maintain the idea that the market will remain range-bound. As the market is currently close to the price level where raw materials are supported, try to buy at a low price.
Strategy: Cautiously bullish
Risks: production may increase substantially, inventory may continue to accumulate, and demand may decrease substantially, etc.
Crude oil: OPEC lowered its forecast for demand growth in the fourth quarter.
From the demand side, there have been more and more views that the current oil demand has returned to the level of about 100 million barrels per day before the epidemic. Judging from the current high-frequency data such as the traffic congestion index, all major regions of the world have recovered to 90% or above before the epidemic. The European and American regions gradually recovered in the first half of this year. After September, the demand in other parts of the Asia-Pacific region rebounded rapidly, and the demand recovery continued following the path of China, Europe, America, and other Asia-Pacific regions. At present, the relatively backward ones are still consuming jet fuel. Since the number of cross-border flights is still low, jet fuel consumption is the last mile of oil demand recovery, and other consumption areas have returned to levels close to pre-epidemic levels.
Strategy: Neutral, go long of diesel crack spread (Gasoil-Brent）
Risk: The United States releases strategic reserves.
Copper: It is expected that the operating rate will improve in November, and the price of copper will remain in a fluctuating range.
In terms of spot: According to SMM, the inter-month spread was stable at 400-500 yuan/ton range yesterday. In the morning market, holders began to quote at a premium of 120 yuan/ton for Standard-Grade Copper and a premium of 230 yuan/ton for High-Grade Copper. However, due to few inquiries, holders took the initiative to cut prices. But even if the quotation drops to a premium of 100-110 yuan/ton, it was still difficult to have a concentrated transaction volume. After entering the second trading session, some holders took the lead in reducing the price to about a premium of 90 yuan/ton, and it was still difficult to have a certain degree of activity. High-Grade Copper quotation was stable at a premium of 200-220 yuan/ton, and only Peruvian slabs can be sold directly to downstream processing companies at a premium of 180-190 yuan/ton. Hydro-Copper was still in short supply, but the difference between Hydro-Copper was huge. NORISLK quoted at a discount of 180-150 yuan/ton, and BIRLA was stable at a premium of 30-50 yuan/ton, which was still the preferred brand for downstream bargain-hunting replenishment.
On the macro front, OPEC’s latest monthly report shows that global crude oil demand may decrease due to soaring energy prices. OPEC lowered its 2022 crude oil demand forecast for OPEC by 100,000 barrels per day to 28.7 million barrels per day. After the White House said the day before that it would not announce plans to release the Strategic Petroleum Reserve (SPR) and would continue to cooperate with OPCE to increase oil supply, hawkish Democrats urged Biden to act quickly. Specifically, it includes the release of oil from the national strategic reserve, and even more radical measures to ban U.S. crude oil exports to solve the problem of rising gasoline prices. According to data from the market intelligence company Kpler, in October, approximately 1.6 million barrels of crude oil from the US Strategic Petroleum Reserve were shipped out, a monthly record. A number of important results were achieved at the COP26 meeting held in Glasgow on October 31. Countries have updated their independent contribution commitments (NDC), and 84% of countries have increased their NDC targets. More than one hundred countries, including China, have pledged to end deforestation by 2030. From the perspective of global carbon neutral progress tracking, Suriname and Bhutan have achieved carbon neutrality. 13 countries and regions including Germany have completed legislation on carbon neutrality. 3 countries and regions including Ireland are in the process of legislation, and China and others. 50 countries and regions have formed a policy oath. However, the updated version of the NDC and other commitments reported by various countries have only reduced the annual greenhouse gas emissions by 7.5% on the basis of the original forecast in 2030. The "2021 Emission Gap Report" report predicts that by the end of this century, the global temperature will rise by 2.7°C, which is still far behind the 2/1.5°C target. The US inflation data released the day before hit a 31-year high. At the same time, the Baltic Dry Bulk Index BDI, often used by economists as a leading indicator of inflation, has fallen by 50% since October, reaching its lowest level since June on November 5.
Recently, there have been frequent positive news that the industry is expected to pick up on the issue of debt financing by real estate companies. At a symposium of representatives of real estate companies held by the China Interbank Market Dealers Association on November 9, companies such as China Merchants Shekou, Poly Development, and Country Garden stated that they have plans to register and issue debt financing instruments in the interbank market in the near future. According to the latest data released by the People's Bank of China, financial institutions have seen a significant increase in real estate loans recently. The market has released the risk sentiment of the mainland real estate, and the risk appetite has rebounded.
On the whole, it is expected that the operating rate will improve in November, and the copper price will remain in a shock range. Unilaterally, we maintain the judgment that the market will fluctuate widely and there are downside risks.
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: The performance of terminal orders is insipid, and the willingness to restock is weak.
1. PX processing fees continue to be low.
(1) The production load has been reduced to 20% on November 8, and it is planned to start maintenance for 2 months on November 10.
(2) On October 25, Rongsheng issued an announcement that the Ministry of Commerce agreed to arrange the import allowance of 12 million tons of crude oil for non-state-owned trade in the second phase of the Zhejiang Petrochemical Co., Ltd. Refining and Chemical Project in 2021. On November 1, the two PX lines of Zhejiang Petrochemical have been upgraded to full capacity, the supply of PX has gradually recovered, and the subsequent third production line is expected to increase the load, and the PX processing fee has been reduced to a low level on the left.
2. PTA processing fees are compressed.
(1) The PTA processing fee was once again reduced to below 500, and the terminal load dropped again.
3. The terminal operating rate dropped, and the orders were insipid.
Balance sheet outlook: PTA will gradually enter the inventory accumulation cycle from November to December.
(1) Unilateral: PTA and PX processing fees are basically compressed in place, and the correction of crude oil benchmarks is expected to be limited. It is recommended that on unilateral prices, taking a wait-and-see attitude.
(2) Intertemporal: For the 1-5 spread, adopt a reverse arbitrage strategy.
Risks: PTA factory's control over the maintenance rhythm; the load situation of Zhejiang Petrochemical PX; the maintenance time of polyester reduced load.
1. 单边：中性 2. 跨市：暂缓 3. 跨期：暂缓；4. 期权：暂缓
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