Iron Ore: The consumption of thread and hot-rolled coil collapses, and iron ore may usher in a cold winter.
Last week, the Steel Union announced the production, sales and inventory status of the five building materials commonly used in construction. The data shows that the total consumption of the five major materials is 9.47 million tons, an increase of 20,000 tons on a weekly basis. Among them, the thread consumption decreased by 30,000 tons, and the hot-rolled coil consumption decreased by 40,000 tons. The current time is an absolute peak season, and the performance of this set of data is significantly lower than market expectations. As the temperature in the north turns cold, steel consumption is expected to continue to decline. At the same time, since the 2205 contract for iron ore, the exchange adjusted the delivery rules in the early stage. At the same time, due to the drop in the spread between low and medium grade products, resulting in the rotation of iron ore delivery products, the space below the price of iron ore may open up. As of the close of last Friday, the Iron Ore 01 contract closed at 536 points, down 11 points on a week-on-week basis. In terms of spot, the lowest price of PB in the four main ports was 572 yuan/ton, which was down 33 yuan/ton on a weekly basis; SSF was 372 yuan/ton, which was down 8 yuan/ton on a weekly basis. In terms of basis, both futures and spot prices fell.
On the supply side, according to Mysteel's statistics, the total global shipment volume was 27.14 million tons, a week-on-week decrease of 3.48 million tons. Among them, Australia's shipping volume decreased by 2.7 million tons from the previous week to 15.47 million tons, which was basically stable. Brazil's shipment volume decreased by 230,000 tons from the previous week to 6.09 million tons. Non-mainstream shipments amounted to 5.58 million tons, a week-on-week decrease of 550,000 tons.
In terms of demand, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 70.34%, a decrease of 1.24% week-on-week and a year-on-year decrease of 16.11%; the blast furnace ironmaking capacity utilization rate was 75.35%, a week-on-week decrease of 0.38%, and a year-on-year decrease of 16.29%; the profit rate of steel mills was 42.86% (the lowest in 5 years), which was down 6.93% week-on-week and 49.78% year-on-year; the average daily molten iron output was 2.019 million tons, down 10,200 tons from the previous week and 419,500 tons year-on-year. The blast furnace operating rate of 163 steel plants was 48.62%, a decrease of 0.55% from the previous week, and the capacity utilization rate was 58.69%, which was an increase of 0.10% from the previous week. The utilization rate excluding the eliminated capacity was 63.89%, a decrease of 20.39% from the same period last year, and the profit rate of steel mills was 39.26%, a decrease of 4.91% from the previous month.
On the whole, due to the country's strict control over the real estate industry, steel consumption has experienced a cliff-like decline since the third quarter. With the rapid decline in steel prices, the profits of the long-term process are rapidly compressed until they fall near the cost of the steel plant, and even losses occur, resulting in extremely bearish raw material prices. Due to the decline in the full variety of spot products, the delivery grade of iron ore may be switched from the original SSF to JMBF, PB, or Newman. The brand premium of iron ore is the spread between the medium-to-high grade and the low grade, which is about 70-80 yuan/ton. As a result, JMBF is about to become the best delivery grade of iron ore, which further opens up the downside for iron ore.
Unilateral: go short when prices hit high levels
Spot-Futures Arbitrage: None
Concerns and risks:
1. The state stimulates the economy.
2. Large-scale production cuts occurred in the mines.
3. Risk of rising sea freight, etc.
Rubber: Supported by the supply side, rubber prices continue to be strong.
Last week, the price of rubber fluctuated and rose, and the expected relaxation of the domestic real estate market brought about a warming of the overall market atmosphere. The price of rubber continues to rise as its own supply is tight. At the same time, due to the rebound in downstream purchases, domestic port inventories continue to decline.
The total inventory of domestic exchanges as of November 19 was 179,523 tons (-127802), and the amount of futures warehouse receipts was 12810 tons (-125770). The RU11 contract expired, and the cancellation of the old rubber warehouse receipts resulted in a decline in the warehouse receipts and inventory. The current inventory is higher than the same period last year, but lower than the same period in 2019. As of November 14, inventory in Qingdao Free Trade Zone continued to decline, and the decline increased month-on-month, mainly due to the increase in downstream purchases. In the future, we will focus on the turning point of accumulated inventory.
In terms of downstream tire operating rate, as of November 18, the operating rate of all-steel tire companies was 65.48% (+1.48%), and the operating rate of semi-steel tire companies was 61.26% (+1.26%). Due to the impact of previous power restrictions, the recent downstream production has accelerated. At the same time, the peak season for domestic downstream terminals is approaching, and tire plant operating rates continue to pick up.
Opinion: At present, the domestic Qingdao port inventory continues to decline, mainly due to the lack of rebound in arrivals and the rebound in downstream raw material purchases. With the end of this round of replenishment of inventory downstream, it is expected that the port outbound will fall. However, due to the impact of delayed shipping schedules and it is difficult to alleviate in the short term, the inflection point of inventory accumulation in domestic ports will continue to be postponed, which will provide strong support for rubber prices. At the same time, due to the impact of rain in Thailand's main production areas, the price of raw materials remained strong, and the rain continued to affect the peak season. The reduction in the number of rubber delivery days may affect the peak season output this year. No conclusion can be drawn at present, but the high price of raw materials may partly explain the tight supply situation. After the cancellation of the domestic old rubber warehouse receipts, the inventory has rebounded year-on-year but the absolute value is still at a low level. Pay attention to the position of the RU01 contract. Under the overall tight fundamentals pattern, rubber prices will continue to be strong.
Strategy: Cautiously bullish
1. The domestic supply may increase significantly.
2. The impact of the epidemic and other factors may cause demand to continue to weaken.
3. Funds may be tight.
Crude oil: The three major institutions revised up non-OPEC supply growth.
Last week, the three major institutions issued a November report. This monthly report has a bearish impact on the market. Due to the epidemic, the demands of the three major institutions tend to be lowered. However, due to the expected increase in production in the United States, non-OPEC supply has been revised upwards, and the market supply and demand gap has narrowed. However, the current OPEC production increase is still below expectations, which is lower than the planned increase of 400,000 barrels/day per month. The overall supply and demand gap in the market has not changed much.
Demand: EIA predicts that the demand growth in 2021 will be 5.12 million barrels per day, which is an upward revision of 60,000 barrels per day from the previous month, of which China’s demand will increase slightly. OPEC predicts that demand growth in 2021 is estimated to be 5.65 million barrels per day, which is a downward revision of 150,000 barrels per day from last month's forecast, mainly due to the downward revision of US demand growth. The IEA predicts that demand growth in 2021 is estimated to be 5.5 million barrels per day, which is revised down by 30,000 barrels per day from the previous month’s forecast, mainly due to the impact of the epidemic.
Non-OPEC supply: EIA expects that 2021 non-OPEC supply will increase by 810,000 barrels/day compared to the same period last year, which is an upward revision of 140,000 barrels/day from last month’s forecast. The US supply is revised upwards of 200,000 barrels/day from last month. EIA predicts that the total liquid supply in the United States will increase by 170,000 barrels per day in 2021, and it is expected to increase by 1.4 million barrels per day in 2022. OPEC expects non-OPEC supply to increase by 660,000 barrels per day in 2021, unchanged from last month's forecast. The IEA expects non-OPEC supply in 2021 to increase by 720,000 barrels per day year-on-year, which is an upward revision of 100,000 barrels per day from last month's forecast, mainly due to the upward revision of U.S. production.
OPEC production: According to EIA statistics, OPEC's production in October increased by 240,000 barrels per day from the previous month to 27.4 million barrels per day. The increase in production came from Saudi Arabia and Iraq. According to OPEC's statistics, OPEC's production in October increased by 220,000 barrels/day to 27.45 million barrels/day, mainly from Saudi Arabia, Venezuela and Iraq. According to IEA statistics, OPEC production in October increased by 240,000 barrels per day from the previous month to 27.42 million barrels per day. OPEC's overall compliance rate was 124% higher than last month, and the increase in production was still not as good as expected.
Strategy: Neutrally bearish, go long of diesel crack spread (Gasoil-Brent）
Risk: The United States releases strategic reserves or adopts other policies to curb oil prices.
Copper: Invoicing is controlled by the customs, and the frenzy of premiums may hardly be quelled.
According to SMM, the average price of SMM 1# Copper Cathode in the week of November 19th ran at RMB 70,325/ton and RMB 72,400/ton. The average premium and discount price of Standard-Grade Copper runs at RMB 2,075/ton, showing an upward trend in the middle of the week. Last week, copper prices tended to decline first and then rise. The Shanghai Copper 12 contract operated from a minimum of 68,670 yuan/ton to a maximum of 71,500 yuan/ton. It closed at 71,120 yuan/ton on Friday night, a weekly increase of 550 yuan/ton.
On the macro front, expectations for interest rate hikes by the Bank of England and the United States are heating up. The UK's October CPI hit the highest year-on-year growth rate in nearly a decade, and the New York Federal Reserve Manufacturing Index rose more than expected. Manufacturing surveys by the Philadelphia and New York Federal Reserve Banks show that inflationary pressures continue to accumulate as demand continues to strengthen and further pressures the supply chain. In the middle of the week, many Fed officials gave a speech, and the U.S. index pulled up to put pressure on copper prices. On Friday, the Fed’s vice chairman and board members all voiced their support for taper, and the process is expected to accelerate. The U.S. House of Representatives voted to pass Biden’s $2 trillion economic plan, making it the largest social expenditure bill in the U.S. It is currently awaiting passage by the Senate. Domestically, leaders of China and the United States held a video meeting on Sino-US relations and related issues this week, and exchanged views on Sino-US relations and issues of mutual concern. The capitals of the two countries believe that the meeting was frank, constructive, substantive, and fruitful. It is conducive to enhancing mutual understanding between the two parties, increasing the international community’s positive expectations of Sino-US relations, and sending a strong message to China, the United States and the world. Strong signal. The National Standing Committee was held. The meeting pointed out that on the basis of the establishment of carbon emission reduction financial support tools, another 200 billion yuan will be established to support the clean and efficient use of coal in a special re-lending to form a policy scale and promote green and low-carbon development.
On the whole, long and short are intertwined, and the domestic customs temporarily controlled the issuance of value-added tax invoices, which caused the spot premium to soar. If the contradiction between the input invoices cannot be alleviated, the frenzy of premiums may not be quelled. The current inventory turning point has not yet arrived, and the volatility of copper prices may remain.
1. Unilateral: neutral
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
1. Accumulate inventory turning point.
2. Monetary policy orientation.
3. Energy crisis risk.
PTA: The processing fee is once again compressed to a low level. Pay attention to the progress of TA factory inspection and maintenance in December.
Last Friday compared to this Friday, TA2201 closed at 4942 yuan/ton, which was -56 yuan/ton from the previous week. In terms of spot, PTA4872 yuan/ton, down 51 yuan/ton from last week. TA basis is -70 yuan/ton, which is +5 yuan/ton compared to last week. PTA processing fee is 47-yuan/ton, down -3 yuan/ton from last week. PX 913 US dollars / ton, down 9 US dollars / ton. The PX processing fee is US$155/ton, which is +12 US$/ton from last week.
In terms of PX supply, this week’s CCF’s PX China operating rate was 69.3% (+0.5%), and PX Asia’s operating rate was 71.1% (+1.4%). The third production line of Zhejiang Petrochemical PX began to increase the load. The total operating rate of Zhejiang Petrochemical rose to 75%. The 700,000 tons of Liaoyang Petrochemical was unexpectedly overhauled for 5 days on November 16, and Qingdao Lidong reduced the load to 65%. In terms of PX in Asia, Japan’s JX Kawasaki 350,000 tons, South Korea’s Lotte 500,000 tons, South Korea’s GS 400,000 tons recovered, and Japan’s Idemitsu’s 210,000 tons resumed for two weeks starting on November 13. The overall inventory accumulation rate of PX from November to December is not large. The PX processing fee in the early stage has been compressed on the left side and rebounded from the low this week.
In terms of PTA supply, CCF's PTA operating rate was 81.2% (+3.1%) this week, and the operating rate is still high. Shenghong's 1.5 million tons has not yet recovered. However, the PTA processing fee was compressed to a low level of close to 400 yuan/ton during the week, triggering the expectation of the maintenance of 2.5 million tons of Hengli and 2.25 million tons of Yisheng Dahua in December.
In terms of terminal supply and demand, 70% (+0%) of Jiangsu and Zhejiang looms were started, and there were still local power cuts in Xiaoshao, Nantong and other places in Jiangsu, Zhejiang; New terminal orders are still poor, and the willingness to speculate on filament replenishment is lacking. The pressure on filament inventory continues to increase this week. This week, POY inventory days are 21.6 days (+0.6), FDY inventory days are 29 days (+0.1), and DTY inventory days are 20.1 days (+1.5). The overall operating rate of polyester is 87.8% (+2.4%), and the operating rate of direct-spun filament is 83.3% (+4.8%).
Overall, the PX processing fee has hit a low level on the left, but the Asian PX accumulation is not under pressure, and the PX processing fee is expected to bottom out and rebound. Under the background of PTA maintenance and repairs, December will end the inventory accumulation cycle and enter a small destocking stage. The low PTA processing fee of 400 to 500 will have rebound demand, and the continuous compression space is limited. However, the increase in terminal load is still slow, and under the background of downstream negative feedback, the room for rebound in processing fees is also limited.
(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: In December, PTA failed to accumulate inventory continuously after the overhaul was fulfilled. For the 1-5 spread, the reverse arbitrage strategy has ended.
Risks: Potential overhauls of PTA factories under the background of low processing fees; 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
1. 累库拐点 货币政策导向 能源危机风险