Crude oil

Due to the continued spread of China's new coronavirus, investors’ worries over the substantial reduction in crude oil demand still have a significant suppressive effect on oil prices. Brent oil fell more than $2 per barrel overnight, which was a new low since January last year. The US WTI crude oil once fell below the integer mark of $50 per barrel. In addition, judging from the structure of the short-term and long-term spreads yesterday, Brent began discounting in terms of the far-month contracts in recent months, and pessimism has heated up. However, in response to the expected decline in demand, OPEC+ plans to advance the original March meeting to mid-February, and it is more likely to extend the production reduction agreement or increase production reduction. In general, we believe that after continuous declines in the previous period, there is limited room for oil prices to continue to fall, and long strategies are recommended.

Raw materials of Polyester

Under the pressure of a sharp drop in overseas crude oil and the continued spread of new domestic coronaviruses during the Spring Festival holiday, the main domestic PTA and MEG contracts both slumped by the maximum daily limits, and there were many futures varieties sealed on the daily limits, pessimism has heated up. From the downstream point of view, the delay in rework of workers and the blocked transportation, which will directly lead to the rapid accumulation of finished product inventories of polyester enterprises and the reduction of the operation load. As far as PTA is concerned, the current industry chain profits have been further compressed, and the PTA spot processing fees have fallen below ¥500 per ton, and the late maintenance may be intensified. From the perspective of MEG, the spot price fell sharply by nearly ¥700 per ton yesterday, and the basis gap narrowed rapidly, and the cash flow of various processes suffered a significant loss. Therefore, in operation, it is advised that investors with no position pay attention to the long position at the bottom and maintain the long strategies in the medium term.

Iron ore

The negative impact of steel is transmitted to upstream raw materials, and the backlog of finished products will restrain steel mills from purchasing. The negative performance of iron ore was the most obvious because the replenishment of steel mills pushed up the ore prices before the Spring Festival. At present, Platts price has fallen below $80 per ton (considering the delivery superiority, the Golden Bubba is equivalent to about ¥600 in DCE). Meanwhile, Brazil’s floods caused low shipments in the first quarter, it is still uncertain whether it will recover in the future. It is advised to be cautious when the price is below ¥600.

Natural Rubber

There were scarce inquiries for Qingdao rubber in USD. The CIF of STR20 was $1,360 per ton. The spot price and CIF of SMR20 was $1,365per ton. The CIF of mixed rubber from Thailand in April was $1,380 per ton. Overseas rubber slumped sharply. The main force contract of TF05 fell by 6.6 or 4.88% to 128.7. The main force contract of JUR06 fell by 4.2 or 2.38% to 167.8. The SHFE rubber slumped by the limit. The main force contract of RU05 fell by 940 or 7.78% and closed at 11,145, and the main force contract of NR04 fell by 760 or 7.52% and closed at 9,350.

Xinhua News: On January 29, Sailun Group actively responded to the Qingdao Municipal Government's proposal to "initiate the orderly participation of all civilian and SMEs to jointly win the battle against epidemic prevention and control", and donated 10 million yuan through the Qingdao Red Cross Group for the prevention and control of the pneumonia epidemic of new-type coronavirus infection. Among them, the enterprise donates 6 million yuan, and the group management and employees donate 4 million yuan. In addition to this donation, Sailun Group also actively provided emergency support through Wuhan's local distributors, fleets and other channels to provide tires, masks and other material support for Wuhan local hospital construction and hospital treatment.

History review on the RU05 contract: In the three trading days from September 22 to September 26, 2011, the SHFE RU05 contract continued to fall by 5.47%, 5.40%, 5.02%, respectively, which was the largest cumulative decline in the three days in history. During the financial tsunami in 2008, due to the different limit settings, the eight trading days from September 26 to October 16 dropped from 19305 to 13,810, a cumulative decline of 28%.

Futures Operation Advice: The SHFE rubber slumped by the maximum daily limits. The epidemics curtailed demand for commodities. It is advised to fully hedge the position and wait and see.

(For reference only)