Crude oil

Overnight international crude oil continued to fall from the high level. The easing of tensions in the Middle East was an important factor in the weakening of oil prices. In addition, data released by the US Energy Agency on Wednesday showed that as of last week, domestic crude oil inventories in US increased by 1.2 million barrels, while the market expectation is a reduction of 3.6 million barrels. The unexpected increase in inventory further dragged down oil prices. As the remarks of the US President have largely eased the contradiction between the US and Iran, oil prices will more reflect the status of supply and demand fundamentals. Overall, it is expected that the downward trend of high oil prices may continue as the US-Iran conflict no longer escalates.

Raw materials of Polyester

Yesterday, the domestic main 2005 contract of PTA continued its downward trend, and once reached the integer mark of ¥4,900 per ton. In comparison, the main 2005 contract of MEG maintained a high and volatile trend. As far as PTA is concerned, a line with an annual productivity of 1.25 million tons in the new 2.5-million-ton plant of Hengli Petrochemical will be put into operation, and another 1.25-million-ton line is planned to be commissioned in late January. The supply pressure in the first quarter is obvious. Meanwhile, the intervention of spot-future arbitrage has prompted the recent increase in warehouse receipts, and the delivery pressure exists. In comparison, the MEG inventory is relatively low, and its 2005 contract is substantially discounted to the spot, resulting in its price supported, but the pressure of increasing supply cannot be ignored. Overall, without considering the sudden factors of crude oil, the bearish pattern of PTA may continue, while the trend of MEG may be relatively strong.

Iron ore

The iron ore dropped significantly with departure of funds yesterday. According to statistics from Mysteel, the total inventories of imported sintered powder in 64 steel mills was 19.92 million tons, indicating that the replenishment process has entered the end stage. If the delivery superiority of golden bubba is considered, the 2005 contract was overvalued currently, and the platts price dropped by $2.25 with the 2005 contract down. It is expected there is a risk of falling with the departure of speculative funds.

Natural Rubber

The quoted price of Qingdao rubber in USD dropped by $5 to $10 per ton. The quoted spot price of RSS3 was $1,700 per ton. The CIF of STR20 in April was $1,550 per ton. The spot price and CIF of SMR20 was $1,500 to $1,510 per ton. The CIF of mixed rubber from Thailand in May was $1,550 per ton. The quoted spot price of mixed rubber from Thailand in RMB was ¥11,850 per ton. Overseas rubber was strong was weak and fluctuated. The main force contract of TF03 fell by 2.9 or 1.92% and closed at 148.0. The main force contract of JRU06 fell by 1.4 or 0.70% and closed at 199.1. The SHFE rubber fluctuated at the bottom. The main force contract of RU05 rose by 50 or 0.39% and closed at 13,015, and the main force contract of NR04 rose by 30 or 0.28% and closed at 10,880.

China Rubber Magazine: The latest data from the International Rubber Study Group (IRSG) shows that global demand of rubber is expected to increase by 2.6% in 2020, while the demand is expected to decrease by 1.5% compared to 2018. According to IRSG's latest report of the Global Rubber Industry Outlook, global rubber demand will recover in 2020. The report shows that the 4.3% of the tire industry growth will be the main factor driving the recovery of global rubber demand in 2020.

The demand for natural rubber is positively related to the economic growth rate. On the second day of the IRSG's announcement that rubber demand may increase by 2.6% in 2020, the World Bank lowered its global economic growth forecast for the same year to 2.5% (previous value was 2.7%). According to the latest data by Zhuochuang, the domestic all-steel radial tire operating rate was 71.8%, up 12.1% week-on-week and 0.3% year-on-year. The resumption of production lines that had been overhauled has obviously driven the operating rate increase.

Futures Operation Advice: The SHFE rubber fluctuated at the bottom. As for the main contract of RU05, it is advised to long a position currently and set a stop at the previous high level at 12,980 below.

(For reference only)