Iron Ore: LPR fell slightly lower than expected, and iron ore futures and spot strengthened again.
Opinion and logic:
Yesterday, the central bank announced that the 1-year LPR for this month was 3.70%, compared with 3.80% last time. The LPR over a 5-year period was at 4.60%, compared to 4.65% last time. Although the reduction of LPR over 5-year period is lower than market expectations, it is not difficult to see the strength of the government's loose monetary policy. In addition, the production, sales and inventory data released by the Steel Federation yesterday showed that the overall inventory accumulation of the five building materials commonly used in construction was lower than the seasonality, which further boosted market confidence. By the close, the main 05 contract of iron ore futures was 742 yuan/ton, up 7 yuan/ton from the previous trading day. Affected by futures, the spot price of imported iron ore at ports strengthened slightly yesterday, rising by 0-20 yuan/ton in total throughout the day.
On the whole, the monetary policy announced by the central bank yesterday is fully in line with the requirements of the Central Economic Work Conference in mid-December 2021. That is to say, in 2022, the economic work next year requires steady progress. All regions and departments should shoulder the responsibility of stabilizing the macro economy, and actively introduce policies that are conducive to economic stability, and the policy efforts should be appropriately advanced. The crude steel production limit task has been completed ahead of schedule, and the later production limit is expected to become more moderate. Although the iron ore is still in a high inventory state, the administrative production restriction policy has led to the accumulation of iron element inventory all at the mine end. 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 production control is relaxed. On the trend, it is expected that iron ore will still fluctuate at high levels.
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 price of raw materials fluctuated in a narrow range, and the price of rubber continued to fluctuate.
On January 20, the most-active RU contract closed at 14940 (+40) yuan/ton, the price of mixed rubber reported 13450 (+50) yuan/ton, and the basis of most-active contract stood at -1040 yuan/ton (-240); the open interest of top 20 actively traded long positions was 115580 (-1416) lots, the short position was 177661 (+1211) lots, and the net short position was 62081 (+2627) lots.
On January 20, the most-active NR contract closed at 12095 (-5) yuan/ton, the STR in Qingdao Free Trade Zone reported 1,835 (-15) US dollars/ton, the SMR stood at 1,830 (-15) US dollars/ton, and the SIR figure was 1,880 (-5) US dollars/ton.
As of January 14: the total inventory of domestic exchanges was 239,925 tons (+5125), and the amount of warehouse receipts of exchanges was 219,910 tons (+4400).
Raw materials: Sheet rubber 55.05 (0), cup lump 49.15 (+0.6), latex 53.8 (+0.8), RSS3 59.11 (+0.82).
As of January 6, the operating rate of domestic all-steel tire factories was 59.01% (+6.98%), and the operating rate of semi-steel tire factories was 59.36% (-0.69%).
1. Epidemic recurring
2. The spread between futures and spot prices continues to widen
3. Weak demand
Crude oil: EIA crude oil and refined oil inventories increased.
EIA released inventory data yesterday, including crude oil and refined oil inventories increased, and the rate was higher than market expectations. Total oil inventories have increased for 3 consecutive weeks. From a global perspective, oil inventories have begun to bottom out in mid-December last year, which has shown that the global supply and demand gap has narrowed. Therefore, fundamentals are not the main driver of the current rise in oil prices. In terms of geopolitics, oil prices are also facing an impossible triangle. That is, for the United States, it is unlikely that it will remain strong against Russia on the Ukraine issue and remain unresolved on the Iranian nuclear issue, while keeping oil prices low. We believe that the United States will inevitably find a balance among them, so whether it is the situation in Ukraine or the Iran nuclear talks, there is a possibility of eventual reversal. For Saudi Arabia, because of Trump’s sanction waiver on Iran in 2018, the current oil price has been deeply bound to Biden’s diplomacy and inflation suppression strategy.
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 domestic interest rate cut cycle began, and copper prices continued to rise in the off-season.
On the macro front, U.S. Treasury Secretary Yellen said that inflation is expected to remain above 2% in 2022. Even with reduced fiscal support, there is a buffer stock of accumulated savings that will continue to support the economy for years to come. Responsibility for tackling inflation is shared by the Fed and the Biden administration, with the desire and intent to bring inflation down to meet the Fed's price stability objective. The number of Americans filing for unemployment benefits in the week ended January 15 recorded 286,000, the highest since October last year. Analysts pointed out that the increase in initial jobless claims may be due to the outbreak of the Omicron virus strain. In addition, U.S. existing home sales fell for the first time in four months in December, due to fewer listings and higher interest rates. On the domestic front, China's one-year loan market quoted rate (LPR) was 3.7% in January, compared with an expected 3.7% and 3.8% last month. The 5-year LPR was 4.6% vs. 4.55% expected and 4.65% last month.
From a fundamental point of view, there is only more than a week left before the Spring Festival, and some downstream companies are gradually entering a state of holiday and production shutdown. In addition, the copper price of 70,000 yuan / ton continued to restrain downstream buying interest, making the market transaction insipid. On the other hand, holders of goods currently want to exchange for spot when the price is high, and the market quotation is far greater than the that of inquiry buyer. The downward trend of spot premiums was established, and the premiums and discounts of Shanghai copper fell for two consecutive days. Inventory in Guangdong fell again, and the premium and discount of South China copper remained unchanged from yesterday under the support of low inventory. In terms of scrap copper, the spread between refined copper and scrap copper continued to remain within a reasonable range. On the import side, the import window continued to be closed. LME0-3 maintains the Back structure, and market trading continues to maintain low activity. In terms of inventories, LME destocked slightly, while SHFE inventories were flat.
Overall, the domestic interest rate cut cycle has begun, and copper prices continue to rise in the off-season.
1. Unilateral: Cautiously bullish
2. Inter-market: postpone
3. Inter-period: postpone
4. Options: postpone
1. Inflection point of inventory
2. U.S. Treasury yields continued to rise
3. The risk of the epidemic may increase.
PTA: The terminal quickly reduced production load before the Spring Festival, and the processing fee of PTA dropped slightly.
1. PX is still strong.
(1) Most of the Korean installations have reduced the production load to around 70% - 80%. South Korean suppliers are not active in signing long-term contracts for PTA factories, and the market is worried about more loss-making production cuts. The total production load of Zhejiang Petrochemical is still 60%-65%, and the increase rate is still slow. Against the background that Zhejiang Petrochemical's load is still not high, Asian PX is expected to quickly destock from January to February. The PX processing fee is expected to be firm, with a slight correction from the high level this week.
2. PTA processing fee fell slightly, but the rate of fall was slow.
(1) Fujian Chemical and Trade will be overhauled from January 3 to January 23. Yisheng Dahua's 2.25 million-ton capacity reduced the load to 70% on January 12. Since the end of December, the long-term contract signing process of Hengli in 2022 is still slow. If it is still not signed successfully in January, the circulation of the follow-up traders may be tightened, causing the circulation inventory to be transferred from the middle and lower reaches to the upper reaches.
3. The terminal end quickly reduces the production load before the Spring Festival.
(1) Unilateral: Cautiously bullish. PTA processing fee is still strong in the short term, and PX processing fee is also strong.
(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.
单边：谨慎看多 2. 跨市：内外反套 3. 跨期：暂缓；4. 期权：暂缓
库存拐点 2.美债收益率持续走高 3.疫情风险加剧