Crude oil

The international crude oil fluctuated slightly overnight and the closing price was almost flat with the last trading day. At this stage, the Oman Energy Minister said that the OPEC meeting in December is expected to continue the production reduction agreement, but will not further expand the extent of production cuts. In addition, due to the slowdown in investment in crude oil exploration in the United States, Goldman Sachs lowered the average daily output of US crude oil to 600,000 barrels next year. However, the current market focus is still on the trade process between China and the United States. The rise in oil prices in the past two weeks has also benefited from the easing of trade tensions between the two countries. Overall, we believe that oil prices will continue to fluctuate strongly in the short term.

Raw material of Polyester

Yesterday, the domestic main force 2001 contract of PTA fluctuated at low level, and the futures price was relatively weak. In comparison, the main force 2001 contract of MEG rebounded from the bottom and went up sharply with great volume and increasing positions over evening session, and the short-term trend was relatively strong. As far as PTA is concerned, the processing fee of spot PTA has fallen to ¥510 per ton around yesterday, and the price difference between PX and naphtha fell to below $260 per ton, and the industry chain profit was further compressed. As for the MEG, the current loss of mainstream naphtha system was almost $40 per ton, and the spot price has certain support due to the low inventory of East China Port. Overall, it was advised to hold a slight long position of PTA and pay attention to the long opportunity on MEG.

Iron ore

Currently, since steel mills generally start replenishing the warehouse from 1 to 1.5 months before the Spring Festival, steel mills have not started the replenishment yet. It should be noted that due to the prevailing pessimism in the early stage, the in-plant inventory of steel mills has been compressed to the lowest in the same period of history. Therefore, with the recent price falling back to below $80 per ton, the replenishment of the steel mill may start earlier at any time, but the specific time is not easy to determine. The spot price at the port is currently equivalent to ¥655 per ton, at a premium of 7% in terms of the futures price.

Natural Rubber

The quoted price of Qingdao rubber in USD rose $10 to $25 per ton with weak inquiries. The CIF of RSS3 was $1,620 per ton. The CIF of STR20 in February was $1,420 to $1,430 per ton. The spot price and CIF of SMR20 was $1,360 to $1,370 per ton. The CIF of mixed rubber from Thailand in February was $1,420 per ton. The quoted spot price of mixed rubber from Thailand in RMB was ¥11,200 per ton. Overseas rubber rebounded. The main force contract of JRU02 rose 0.8 or 0.47% and closed at 172.8. The main force contract of TF01 rose 1.6 or 1.18% and closed at 137.4. The SHFE Rubber was relatively strong. The main force contract of RU01 rose 30 or 0.29% and closed at 12,210, and the main force contract of NR02 fell 35 or 0.34% and closed at 10,275.

China Securities Journal: The CPCA announced the retail sales data of general passenger vehicles in China in October. The sales volume of China's general passenger vehicles in October was 1.87 million units, a decrease of 6% year-on-year, which has fallen for the fourth consecutive month. The retail sales volume of passenger vehicle in October was 1.843 million units, down 5.7% year-on-year. From January to October, the retail sales of passenger car in narrow sense decreased by 8.3% year-on-year, and the retail sales in October increased by 3.5% and was similar to the month-on-month sales trend in October 2018. The terminal consumption is weak relatively and consumer demand is not strong.

As of the end of October, the delivery inventory of TOCOM RSS3 in Japan were reduced by 118 tons to 12,472 tons, of which 440 tons into the warehouse and 558 tons out of the warehouse. According to data from CAAM, the domestic auto production in October fell by 1.7% year-on-year, and the revised index fell by 4.3%, a slight decrease of 0.5% from the previous month. The driving force from the consumer side is not strong enough recently.

Futures Operation Advice: The SHFE rubber was relatively strong. As for the long position of the main force contract of RU01, it is advised to set a stop at the previous high level at 11,960 below.

(For reference only)