Iron Ore: Tangshan's resumption of production and stock replenishment during the Spring Festival have given iron ore a good start.
Logic and perspective:
Yesterday, Msteel conducted a survey on the resumption of production of 126 blast furnaces in 25 steel plants in Tangshan area. Since January 1, 2022, a total of 13 blast furnaces have resumed production, with a resumed production volume of 17,172 m³, and an average daily molten iron production capacity of approximately 44,100 tons. The blast furnace capacity utilization rate was approximately 66% yesterday, an increase of 11.06% from the survey last Thursday, and a decrease of 14.56% from the same period last year. As of the close, the iron ore 2205 contract closed at 689 yuan/ton, an increase of 9 yuan/ton from the previous day. Yesterday, the Steel Union announced the iron ore shipments last week. Statistics show that 34.67 million tons were shipped globally, an increase of 10,000 tons on a weekly basis. Australia shipped 21.22 million tons, an increase of 1.66 million tons on a weekly basis. Brazil shipped 6.74 million tons, a week-on-week decrease of 1.24 million tons. Non-mainstream shipments amounted to 6.71 million tons, a week-on-week decrease of 410,000 tons. The total volume of 45 port iron ore arrivals was 24.97 million tons, an increase of 4 million tons on a weekly basis. In terms of spot, the price of imported iron ore from Jingtang Port rose by 2-15 yuan/ton throughout the day. Market sentiment was relatively positive, transactions were active, and spot prices rose overall.
On the whole, the Central Economic Work Conference requires all regions and departments to take the responsibility of stabilizing the macro economy and actively introduce policies conducive to economic stability. The crude steel production restriction task has been completed ahead of schedule, and it is expected that the future production restriction will become more moderate. Although iron ore is still in a state of high inventory, if the consumption of thread and hot-rolled coil continues to improve, it is expected to be quickly transmitted to the mine end (destocking) after the release of output control. Long-flow steel mills’ immediate profits are still high, coupled with the steel mill’s expected resumption of production and restocking before the Spring Festival, it is still expected to boost ore prices.
Unilateral: fluctuate at high levels
Spot-Futures Arbitrage: None
Concerns and risks: The implementation strength and extent of the crude steel production restriction policy, the risk of rising ocean freight, etc.
Rubber: The demand was weak, and the price of rubber pulled back from high.
On January 4, the most-active RU contract closed at 14695 (-160) yuan/ton, the price of mixed rubber reported 13025 (0) yuan/ton, and the basis of most-active contract stood at -1045 yuan/ton (-40); the open interest of top 20 actively traded long positions was 103265 (-1792) lots, the short position was 163218 (+6519) lots, and the net short position was 59953 (+8311) lots.
On January 4, the most-active NR contract closed at 11595 (-120) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,765 (-10) US dollars/ton, the SMR stood at 1,755 (-10) US dollars/ton, and the SIR figure was 1,785 (-10) US dollars/ton.
As of December 31: the total inventory of domestic exchanges was 230855 (+2800)tons, and the amount of warehouse receipts of exchanges was 208410 (+1820)tons.
Raw materials: Sheet rubber 53.2 (-0.68), cup lump 46.15 (+0.13), latex 49 (+1), RSS3 57.36 (+0.71).
As of December 23, the operating rate of domestic all-steel tire factories was 61.72% (-2.14%), and the operating rate of semi-steel tire factories was 63.7% (-0.05%).
Opinion: Driven by the warmer overseas markets during the holidays, the price of rubber opened up yesterday and then fell. The current pressure on rubber comes mainly from industrial hedging, and there are still arbitrage profits for non-standard spreads. The current rubber market is still mixed with long and short strategies. Weak demand has led to high inventory of finished products in tire factories, restricting their raw material procurement needs. The postponement of shipping schedules has resulted in low domestic arrivals and continued destocking of domestic port inventories. The price of rubber is expected to maintain range fluctuations in the general direction. However, based on expectations that demand will improve after the year, investors are advised to go long when price hits a low level.
Strategy: Cautiously bullish
1. Epidemic recurring
2. The spread between futures and spot prices continues to widen
3. Weak demand
Crude oil: API crude oil inventories continued to decline.
From the perspective of high-frequency liquidity data, in terms of the number of flights and jet fuel consumption, as of December 31, the number of global flights has increased for three consecutive weeks. The number of international and domestic flights both increased, and the increase in international flights was greater than that of domestic flights, mainly because European and American countries opened cross-border travel windows during Christmas, which increased the number of travellers during holidays. At present, although some countries have tightened their anti-epidemic measures, they have limited impact on short-term jet fuel consumption. Need to pay attention to whether there will be a decline in the number of global flights after the holidays. However, judging from the current epidemic situation, the decline will not be very significant, but it will bring a certain drag on the pace of recovery of long-term jet fuel consumption.
In terms of land transportation, the three high-frequency indicators, TomTom Traffic Congestion Index, Apple and Google liquidity have not seen a significant impact of the epidemic on the demand side. Although in the last week of the year, Google’s liquidity index dropped by nearly 13% and Apple’s liquidity index dropped by 4%, it was mainly due to holidays and the seasonal decline in the past few years was basically similar. Therefore, excluding holiday factors, the Ome Keron epidemic has a very limited impact on short-term demand. This is mainly because the symptoms are mild and the prevention and control measures in various countries have not been significantly upgraded. In addition, travel demand during holidays has also hedged part of the impact of the epidemic. In summary, Omi Keron's impact on short-term aviation and land transportation consumption is limited, and it is far lower than market expectations when the epidemic first broke out. This is the main logic driving the repair of low crude oil prices.
Strategy: tend to be neutrally bullish in the short term; Oil prices are currently at the upper edge of the range, investors can go short positions in the medium term
Risk: Geopolitical risk in the Middle East
Copper: OPEC approved an increase in production in February, but crude oil prices remained stable.
In terms of economic data yesterday, the US December ISM manufacturing PMI index recorded 58.7, which was lower than the expected 60.1 and the lowest since January last year. Bloomberg News commented that the Omi Keron variant may have a greater impact on ISM data in the next few months. In addition, OPEC+ approved a 400,000 barrels per day production increase plan in February at a meeting on Tuesday, insisting on gradually resuming the output that was stopped during the epidemic. However, crude oil prices remained relatively strong yesterday.
From a fundamental point of view, the air-conditioning sales data for November 2021 announced yesterday reached 11.955 million units, an increase of 17.79% month-on-month and 7.6% year-on-year. Cumulative production from January to November was 142.478 million units, an increase of 7.89% year-on-year. On the supply side, Las Bambas is tentatively scheduled to resume operations in the near future. As of now, the mine has been blocked for 41 days and ceased operations for 13 days. Domestically, cargo transportation at Erlian Port has resumed, but imports are still closed. In terms of TC, the TC price of imported mines rose slightly by US$0.88/ton to US$62.90/ton last week. It is expected that with the normalization of overseas mine supply and domestic port logistics this week, there is still a possibility of a slight rebound in TC prices.
On the demand side as a whole, after the domestic spot price exceeded 70,000 yuan/ton, the downstream purchasing sentiment was once again depressed, and many copper rod companies had significantly increased their inventories. Some companies chose to reduce the risk of increased inventory through production cuts, causing the operating rate of copper rods to continue to decline last week. As the Spring Festival is approaching and the downstream procurement is currently relatively cautious, the demand-side outlook is hard to be optimistic for the time being.
On the whole, the copper price is holding the 70,000 mark, and the fundamentals are relatively neutral. However, as crude oil prices continue to rise and push up inflation expectations, it is recommended to maintain a bargain-hunting attitude towards copper prices.
1. Unilateral: Cautiously bullish
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
1. Inflection point of inventory
2. The trend of the US dollar index
3. The risk of the epidemic may increase.
PTA: PX processing fees rebounded rapidly.
1. PX processing fees are rising rapidly.
Under the background of low processing costs in the early stage, most of the Korean installations have reduced the production load to around 70% - 80%. India's OMPL restart is postponed. Hengli's 4.75 million tons of PX production capacity has been reduced by 15-20% on December 23, and the recovery time is yet to be determined. Zhejiang Petrochemical's PX 9 million tons production load is still 65% to 70%, and the speed of increasing the production load is still slow. Under the background of Zhejiang Petrochemical's under-full load, Asia's PX will slightly destock from January to February.
2. PTA processing fees are still supported.
(1) The PTA operating rate has returned to a short-term high, and Hengli’s progress in signing the long-term contract next year is still slow. If the signing is still not successful in January, the circulation of subsequent traders may be tightened, and the PTA processing fee will be supported.
3. The terminal production load is still low, but the progress of the filament production reduction is not as good as expected.
Balance sheet outlook: It is expected that the inventory will be slightly destocked in December, but it will enter the seasonal accumulation of inventory in January.
(1) Unilateral: Cautiously bullish. PTA processing fees are still strong in the short term, and PX processing fees continue to rebound.
(2) Intertemporal: take a wait-and-see attitude.
Risks: The price of crude oil fluctuates sharply; PTA factory long-term contract signing progress; Zhejiang Petrochemical PX new plant production load increase progress; polyester plant joint production reduction progress.
需求端整体而言，国内现货价格超过 70000 元/吨后，令下游采购情绪再度受抑，不少铜杆企业库存明显增加，部分企业选择通过减产控制库存增加带来的风险，上周铜杆开工率持续下滑。由于春节逐渐临近叠加下游采购目前相对谨慎的背景，需求端展望暂时难言乐观。
1. 单边：谨慎看多 2. 跨市：内外反套 3. 跨期：暂缓；4. 期权：暂缓
1. 库存拐点 2.美元指数走势 3.疫情风险加剧