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Daily Market Review on Specified Futures Products 2020.01.07

Fang submitted 2020-01-07 12:53:29

Crude oil

The overnight international crude oil surged first and then dropped sharply. The Brent oil price once rose to $70 per barrel above but the final closing price was still lower than last Friday's level. After the US attacked Iran's major general last weekend, international oil prices rose strongly. The market believes that tensions between the United States and Iran will further boost oil prices. From the available information, although the escalation of the confrontation between the two countries is inevitable, it did not have a substantial impact on crude oil supply, and the continued sharp increase in oil prices is bound to affect the execution of OPEC+ production reduction process. Overall, unless there is a disruption in the supply of crude oil, there is limited room for continued rise in terms of current oil prices.

Raw materials of Polyester

Due to the sharp rise in crude oil, the domestic main 2005 contract of PTA and MEG broke through and rose up yesterday. PTA once rose to around ¥5,150 per ton, and MEG approached the integer mark of ¥4,800 per ton. However, driven by the overnight surge and drop in oil prices, the futures prices of PTA and MEG have also fallen. In terms of fundamentals, Xinjiang Zhongtai's device with an annual output of 1,200,000 tons of PTA and Neimeng Yankuang's device with an annual output of 400,000 tons of MEG have been put into production recently, which will lead to the rapid accumulation of PTA and MEG inventory around the Spring Festival due to the seasonal low demand before the Spring Festival. In addition, the processing fee for the main 2005 contract of PTA exceeded ¥600 per ton, and the price difference between PX and naphtha system remained at around $265 per ton. The processing fee has been repaired, and with the decline in polyester profits, the fundamentals of supply and demand were weakening. Therefore, it is advised to maintain the strategy of selling PTA on a rebound and pay attention to risk of the crude oil side, and it is advised to wait and see in terms of MEG.

Iron ore

At the current stage, the main logic of iron ore is still based on the replenishment process of steel mills at the end of the year. As of last week, the iron ore inventories of 64 sample steel mills rebounded to 17.8 million tons, which was about 70% according to the inventory level during the historical Spring Festival, and the replenishment has entered the final stage. At the end of the replenishment process, the spot was still supported, and considering the high daily consumption of steel mills this winter, and the possibility of a short-term decline in spot price is low. The 2005 contract is overvalued currently, and there is a risk of weakening market sentiment in short term after fermentation and speculation.

Natural Rubber

The quoted price of Qingdao rubber in USD rose by $20 to $30 per ton with normal inquiries. The quoted spot price of RSS3 was $1,700 per ton. The CIF of STR20 in April was $1,540 per ton. The spot price and CIF of SMR20 was $1,480 to $1,490 per ton. The CIF of mixed rubber from Thailand in March was $1,530 to $1,535 per ton. The quoted spot price of mixed rubber from Thailand in RMB was ¥11,900 to ¥12,000 per ton. Overseas rubber went higher first and then retreated. The main force contract of TF03 rose by 3.4 or 2.34% and closed at 148.5. The main force contract of JRU05 fell by 0.5 or 0.25% and closed at 198.2. The SHFE rubber fluctuated highly. The main force contract of RU05 fell by 20 or 0.15% and closed at 13,075, and the main force contract of NR03 fell by 60 or 0.55% and closed at 10,920.


Cvworld News: In December 2019, China's heavy truck market is expected to sell over 90,000 vehicles of various types, a year-on-year increase of about 9%, which may exceed industry expectations. Moreover, with the help of the fourth quarter, the heavy truck industry also achieved a growth of about 8% in the second half of 2019. The total sales are 1.17 million vehicles in the whole year, a slight increase of 2% from 1.148 million vehicles in the same period of the previous year, which created a new high annual sales volume in China and even the global heavy truck market and broke the record for heavy truck sales set in 2018. The heavy truck market has changed so much from the beginning of the year that it really exceeds most people's expectations.


Today is the Victory Day in Cambodia and local market is closed. Thailand enters the drier season, and the rainfall decreases seasonally to lower level than in previous years, and tapping is normal. The quoted latex price fluctuated strongly, which closed at 39 baht per kg yesterday, up 4.5 baht per kg from Friday and 13.0% from the day before. Local factories suspended production and take vacations during the five-day New Year holiday, and reduced latex demand led to the slump in latex prices, which has similarly occurred during domestic environmental inspections in Hainan.


Futures Operation Advice: The SHFE rubber fluctuated and was strong relatively. As for the main force contract of RU05, it is advised to hold a long position and pay attention to the long opportunity at 12,950 below, and set a stop at the recent low level at 12,900 below.


(For reference only)



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