Iron Ore: The resumption of production has been confirmed, and the iron ore fluctuates strongly.
Logic and perspective:
Yesterday, Ganggu.com announced the production and sales of steel products across the country and central and southwestern China. The data shows that the national output of building materials was 4.18 million tons, an increase of 330,000 tons on a weekly basis. The output of building materials in the Midwest was 1.49 million tons, an increase of 170,000 tons on a weekly basis. Although the production of hot-rolled coils in the country and in the central and western regions has declined on a weekly basis, overall production has recovered and the resumption of steel production has been confirmed. As of the close, the iron ore 2205 contract closed at 695 yuan/ton, up 9 yuan/ton from the previous day.
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: Port inventories continued to decline, and the rate of decline slowed.
On January 5, the most-active RU contract closed at 14750 (+55) yuan/ton, the price of mixed rubber reported 13100 (+75) yuan/ton, and the basis of most-active contract stood at -900 yuan/ton (+145); the open interest of top 20 actively traded long positions was 108175 (+4910) lots, the short position was 165141 (+1923) lots, and the net short position was 56966 (+2987) lots.
On January 5, the most-active NR contract closed at 11710 (+115) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,790 (+25) US dollars/ton, the SMR stood at 1,780 (+25) US dollars/ton, and the SIR figure was 1,800 (+15) 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 53.55 (+0.35), cup lump 46.65 (+0.5), latex 51.5 (+2.5), RSS3 57.93 (+0.57).
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: Yesterday, the domestic Qingdao port inventory continued to decline as of last weekend, but the decline has slowed down compared to the previous few weeks, mainly due to the slowdown in downstream procurement. The operating rate of domestic tire factories is affected by the weak domestic terminal demand and seasonal off-season, resulting in the accumulation of finished product inventory and the upward pressure on the operating rate. Domestic demand is weak, but based on domestic easing expectations, rubber demand is still expected to improve after the year. Supply-side support still comes from the continuous destocking of domestic port inventory, and it is expected that rubber prices will continue to fluctuate.
Strategy: Cautiously bullish
1. Epidemic recurring
2. The spread between futures and spot prices continues to widen
3. Weak demand
Crude oil: OPEC maintains its original production increase plan unchanged.
At the recent monthly ministerial meeting, OPEC decided to maintain the original production increase plan unchanged, that is, to continue to increase production by 400,000 barrels per day in February. This is basically in line with our previous expectations, that is, in the case of Omi Keron's low impact on demand, OPEC is unlikely to stop increasing production or reduce production again. However, OPEC is still facing the problem that the actual increase in production is not as good as expected. Due to the decline in actual effective production capacity in countries such as Nigeria and Angola, OPEC’s actual increase in production is less than 400,000 barrels per day, and the actual monthly increase in production may remain at 200,000 to 300,000 barrels per day. Therefore, in the case of OPEC countries increasing production proportionally, it will be normal for OPEC to increase production below the target. In terms of magnitude, OPEC’s increase in production has a limited impact on current market demand. However, as future demand growth slows, the supply-demand gap will be significantly narrowed this year.
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: The rise in U.S. bond yields suppresses copper prices, but the feedback on inflation expectations is still positive.
On the macro front, the number of U.S. ADP employment increased by 807,000 in December, which greatly exceeded expectations, increasing investors’ confidence in the Fed’s withdrawal of easing and interest rate hikes this year. The minutes of the Federal Reserve meeting announced yesterday showed that almost all officials at the December meeting believed that it might be appropriate to start shrinking the balance sheet sometime after the first rate hike. Some officials predict that the pace of the current round of balance sheet contraction cycles may be faster than the previous round. The announcement of the minutes pushed the dollar to rebound and U.S. bond yields accelerated upward.
From a fundamental point of view, consumption rebounded slightly as the Shanghai copper market gradually returned, and the overall supply of goods was still tight when market inventories were still at a low level. The right to speak on prices is in the hands of the holders. The rising sentiment of holders of supporting prices has led to an increase in the premiums and discounts of Shanghai copper. Guangdong's electrolytic copper inventory declined slightly, the supply was tight and there were few shippers, which led to a sharp increase in the premiums and discounts of copper in South China. In terms of scrap copper, the spread between refined copper and scrap continued to stay above a reasonable range. In terms of imports, LME0-3 continues the Back structure, and the import window is closed. Import losses expanded again, and overall market transactions were insipid. In terms of inventory, both LME and SHFE are destocked.
On the whole, the Fed's decision was hawkish, and rising U.S. bond yields suppressed copper prices. 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 continue to rebound strongly.
1. PX processing fees rebounded strongly.
(1) 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, and PX processing fees rebounded strongly.
(2) Zhejiang Petrochemical's 2 million tons production capacity restart plan was postponed to mid-January.
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 it will enter the seasonal accumulation phase in January, but the accumulation rate of inventory is controllable.
(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.
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