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Daily morning for Crude oil, PTA, natural rubber, iron ore, copper Iro (ZH & EN) 2021.12.14

Fang submitted 2021-12-14 10:25:51

Iron Ore: Reality collides with expectations, and iron ore remains volatile.

Viewpoint and logic:

Affected by macroeconomic policies and the expected resumption of production by steel mills, iron ore futures prices rose strongly on Monday, with the near-month contract rising more than the far-month contract. The iron ore 2205 contract closed at 668.5 yuan/ton, an increase of 32 yuan/ton, or 5.03%, from the previous trading day, with open interest increasing 36,713 lots. In terms of spot, iron ore spot quotations also generally rose yesterday. The import port has risen by 20-35 yuan/ton throughout the day, the price of imported ore in Qingdao Port has risen by 25-30 yuan/ton, and the PB fines in Tianjin Port has risen by 735-740 yuan/ton. On the 13th, a total of 1.325 million tons of iron ore in main ports nationwide were traded, up 14.2% from the previous month.

In terms of supply, the current iron ore supply side is relatively loose, iron ore shipments are relatively stable, and port inventory remains high. According to Mysteel's statistics, the total iron ore shipped from Australia and Brazil was 22.528 million tons, a decrease of 5.375 million tons from the previous month. Among them, Australia sent 14.083 million tons to China, a decrease of 1.836 million tons from the previous month. China’s 45 ports reached 21.642 million tons, a decrease of 1.208 million tons from the previous month. The total arrival volume of the six northern ports was 9.315 million tons, a decrease of 797,000 tons from the previous month.

On the demand side, due to the recovery of real estate policies, consumption of building materials has also rebounded, but the overall strength is weak, and the off-season characteristics are difficult to change. In addition to the current strict production restrictions in Tangshan, the average daily molten iron output of 247 steel mills last week was 1.987 million tons, a month-on-month drop of 18,100 tons and a new low. The overall consumption of iron ore is relatively weak, but the market still expects steel mills to resume production, and it remains to be seen whether the steel mills can resume production smoothly.

On the whole, the fundamentals of iron ore have not changed much at present, and the pattern of stable supply and weaker demand similar to the previous period is still maintained. Affected by the stricter production restrictions in Tangshan, the average daily molten iron output of steel mills reached a new low. Recently, multiple macroeconomic policies such as the central bank's overall RRR cut and "steady growth" have boosted market confidence, and market optimism has revived. Coupled with the expected resumption of production by steel mills, iron ore prices have rebounded. However, considering that the current ore shipments are relatively stable, and downstream steel mills' production-restricted policies have affected the production capacity that is difficult to release, resulting in continued accumulation of iron ore inventories, it is expected that iron ore will maintain wide fluctuations in the short term.


Unilateral: fluctuate at high levels

Arbitrage: None

Spot-Futures Arbitrage: None

Options: None

Inter-period: None

Cross-species: None

Concerns and risks:

1. Real estate related policies

2. Overseas mining plan

3. Limited production of steel mills

Rubber: Raw material prices rebounded slightly.

On December 13, the most-active RU contract closed at 14760 (+270) yuan/ton, the price of mixed rubber reported 13025 (+150) yuan/ton, and the basis of most-active contract stood at -1110 yuan/ton (-120); the open interest of top 20 actively traded long positions was 95934 (-8) lots, the short position was 138422 (-1832) lots, and the net short position was 42488 (-1824) lots.

On December 13, the most-active NR contract closed at 11470 (+170) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,750 (-25) US dollars/ton, the SMR stood at 1,740 (-45) US dollars/ton, and the SIR figure was 1,780 (-20) US dollars/ton. The basis of most-active contract reported -246 (-40) yuan/ton.

As of December 10: the total inventory of domestic exchanges was 215,861 (+6578) tons, and the amount of warehouse receipts of exchanges was 175,510 (+20980) tons.

Raw materials: Sheet rubber 55 (0), cup lump 47.75 (+0.55), latex 52.5 (0), RSS3 58.36 (+0.81).

As of December 9, the operating rate of domestic all-steel tire factories was 64.26% (+1.28%), and the operating rate of semi-steel tire factories was 63.77% (+1.6%).

Opinion: Driven by the market atmosphere, the price of rubber continued to rebound slightly yesterday. With the reduction of rain in Thailand's main producing areas last week, the price of raw materials has dropped significantly, which has weakened the support of rubber costs last week. Coupled with the widening of the spread between futures and spot prices, the pressure of arbitrage orders makes futures prices fall. This week, with the recovery of the domestic macro atmosphere and the lower support of domestic raw material prices, the price of rubber will stop falling and rebound. It is expected that the price will continue to rebound. However, due to the insipid demand performance and the accumulated pressure on the finished product inventory of tire factories, the upward driving force is insufficient, and long orders need to be held cautiously.

Strategy: Cautiously bullish


1. Epidemic recurring

2. The spread between futures and spot prices continues to widen

3. Weak demand

Crude oil: No substantial progress has been made in the Iranian nuclear talks.

With the release of more information, the characteristics of Omi Keron virus are more inclined to be highly infectious, higher immune escape, and lower severe mortality. The possibility of re-blocking within the world's major economies is low, and the market's previous concerns have eased. From the actual data point of view, whether it is the global traffic congestion index or the number of global flights and other high-frequency indicators, none of them have experienced a sharp decline due to the Omi Keron virus, and more of them are at a high level or stagnant in growth. Omi Keron’s impact on real-world oil consumption is not significant or has not yet been fully reflected. But even so, the crude oil market in the first quarter of next year will still enter a cycle of accumulating inventory. Judging from the current inter-month spread and spot premiums and discounts, they all show the weakness of the current spot market. Although virus concerns have eased and Iran’s nuclear talks have fallen into a deadlock, the room for a rebound in current oil prices is still limited.

Strategy: Neutral


1. Geopolitical risk in the Middle East

Copper: Inflation is high, but copper prices are still fluctuating.


On the macro front, the latest consumer survey by the New York Fed shows that US consumers’ inflation expectations for the next year have risen to a new high of 6%. In addition, three-year inflation expectations have fallen for the first time since June, reaching 4%, mainly driven by the expectations of respondents without a college degree. However, both the short-term and the long-term, the level of uncertainty about inflation is rising, and both have reached record highs. With the current high level of inflation, the market's expectations for the Federal Reserve's acceleration of monetary policy tightening are also rising. The Fed's interest rate decision will usher in the second half of this week.

From a fundamental point of view, according to SMM, the operating rate of refined copper rod enterprises was 69.24%, a decrease of 2.15% from last week. It can be seen that downstream demand has weakened at the end of the year. On the one hand, near the end of the year, whether it is a downstream cable factory or a copper rod company, they will choose to control capital risks and appropriately reduce the amount of orders. Therefore, the willingness to purchase before New Year's Day will be suppressed to a certain extent. On the other hand, downstream consumption does show signs of weakening. As the north turns cold, orders from engineering and real estate terminals continue to decline, and demand enters the seasonal off-season around the Spring Festival. In addition, due to environmental protection issues during the Winter Olympics in Ningjin, some small wire and cable factories have restricted production or stopped production recently. In terms of copper scrap, the price difference between refined copper and copper scrap remained below a reasonable price difference this week, supporting refined copper consumption. In terms of inventory, LME accumulated inventory weekly from 3,425 tons to 81,775 tons, and SHFE destocked weekly from 1,058 tons to 6,331 tons. The social warehouses have accumulated stocks of 7,400 to 90,100 tons on a weekly basis, and the bonded areas have destocked from 8,300 to 175,200 tons on a weekly basis. In terms of imports, this week's import loss on the 01 contract remained at around 300 yuan/ton, while the spot import profit window was open. However, near the end of the year, many traders said that the annual trade indicators have been reached. In addition, the issue of delayed shipping schedules has continued to appear recently, which has also inhibited the enthusiasm of spot trading.

On the whole, overseas macro uncertainties have increased. Fundamentally, the disturbance at the mine end has increased. Major ports in northern China were still affected to varying degrees under the interference of the epidemic, and the TC index declined significantly in November. At the smelting end, the national power curtailment has basically ended. However, due to the interference from the mine and the decline in the price of sulfuric acid, the production enthusiasm of the smelter is inhibited, and the output of electrolytic copper in November is difficult to return to the high level of the second quarter. With regard to scrap copper, the decline in copper prices has driven the spread between refined copper and scrap to fall below a reasonable range, and the consumption support of scrap copper for refined copper has once again appeared. The consumer side showed better performance in the off-season. The end of power rationing and the marginal improvement in real estate led to an increase in the PMI of the copper industry in November. As a result of multiple factors, copper prices remain volatile for the time being.


1. Unilateral: Neutral

2. Inter-market: postpone

3. Inter-period: postpone

4. Options: postpone

Focus point:

1. The Fed's monetary policy orientation

2. The trend of the US dollar index

3. The risk of the epidemic may increase.

PTA: The energy and chemical sector rebounded, and PTA processing fees rose again.

1. After Zhejiang Petrochemical's new plant was put into production, the total load increase was still slow.

(1) The PX 9 million tons production line of Zhejiang Petrochemical Company increased the load to 65% to 70%, and the rate was still slow. Zhenhai Petrochemical is currently operating normally, and attention needs to be paid to potential future impacts. Under the background that Zhejiang Petrochemical is under full load, the accumulation rate of Asian PX inventory in December-January is still slow, and PX processing fees are expected to be compressed.

2. The Zhenhai epidemic has caused Yisheng New Materials to reduce production load expectations.

(1) Due to the epidemic, the 3.6 million tons of Yisheng New Materials plant reduced the production load to 40-50%, and there are expectations for further reduction of the production load and implementation of maintenance. PTA processing fees continue to be strong.

3. The East China epidemic also has an expected impact on the terminal load.

(1) The Shaoxing epidemic still exists, and the terminal printing and dyeing load is affected.

Balance sheet outlook: terminal load reduction leads to polyester reduction in load expectations. In the context of the full implementation of the PTA factory overhaul, it is expected that the inventory will be slightly destocked in December.

Strategic recommendations:

(1) Unilateral: take a wait-and-see attitude; At present, PTA processing fees have rebounded to a short-term high, with limited space below. PX Zhejiang Petrochemical's new production capacity has also suppressed processing fees to a low level.

(2) Intertemporal: take a wait-and-see attitude.

Risks: The price of crude oil fluctuates sharply; PTA plant maintenance progress; Zhejiang Petrochemical PX new plant production load increase progress; polyester plant joint production reduction progress.



























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