Crude oil

After the previous continuous slump, international crude oil rebounded slightly by more than 1% overnight, and optimism about demand pushed up the rebound of oil prices. Yesterday, the Sino-US trade agreement was officially signed, and in addition to the adoption of the US-Mexico-Canada trade agreement, investors' expectations for the global economic recovery have increased. However, a report released by the International Energy Agency yesterday showed that although the OPEC+ agreement was implemented as schedule, it is expected that the output of OPEC in the first half of this year will remain relatively surplus. Overall, we believe that the weak and fluctuated pattern of oil price may continue in the short term.

Raw materials of Polyester

Yesterday, the main domestic 2005 contract of PTA rebounded slightly to the ¥4900 per ton, while the main 2005 contract of MEG continued its downward trend. As far as PTA is concerned, the spot processing fee rose slightly to around ¥580 per ton yesterday, while the processing fee of the 2005 contract remained stable at around ¥650 per ton, and the price difference between PX and naphtha line expanded to $262 per ton again. From the perspective of MEG, although the current inventory is low and the 2005 contract is substantially discounted to the spot, the operation of new devices and the continuous opening of the import window, the pressure in the later period is obvious. In general, it is advised to hold the short position of PTA and maintain a relatively short strategy on MEG.

Iron ore

According to data released by Mysteel this week, the total inventories of sintered powder in 64 sample ports this week were 22.60 million tons, which have exceeded the level of the previous two years before the Spring Festival. Generally, there is still a small amount of replenishment space after the festival, and the replenishment progress is coming to an end. From the recent delivery data of mines, the arrival volume in the next few weeks is expected to be scarce, so the spot in RMB is supported in short term. It is expected that the rubber resources in USD will be under pressure, and the reverse range of import will tend to narrow. At present, the spot price in ports is equivalent to about ¥700 per ton according to futures price, and the discount of futures is at a historically low level. Judging from the absolute price, although the 2005 contract is overvalued currently, the pressure has not come yet. The 2005 contract is expected to fluctuate with the steel.

Natural Rubber

The quoted price of Qingdao rubber in USD was stable and fell slightly. The inquiries of RSS3 was scarce. The CIF of STR20 in April was $1,570 per ton. The spot price and CIF of SMR20 was $1,520 to $1,535 per ton. The CIF of mixed rubber from Thailand in March was $1,560 to $1,565 per ton. The quoted spot price of mixed rubber from Thailand in RMB was ¥12,050 to ¥12,100 per ton. Overseas rubber was strong relatively. The main force contract of TF04 rose by 0.4 or 0.26% and closed at 153.9. The main force contract of JUR06 rose by 1.3 or 0.63% and closed at 207.0. The SHFE rubber fluctuated. The main force contract of RU05 rose by 140 or 1.06% and closed at 13,290, and the main force contract of NR04 rose by 170 or 1.54% and closed at 11,180.

QinRex News: The head of APROMAC stated that the rubber production in Ivory Coast increased by 25% to 780,000 tons in 2019. As new plantations have begun production, the production is expected to reach 850,000 tons in 2020 and will reach 950,000 tons by 2021. Ivory Coast is Africa's largest exporter of natural rubber and the seventh largest producer in the world. As farmers shift from cocoa to rubber in search of a more stable income, new plantations are proliferating.

With the Spring Festival approaching, the transaction of synthetic rubber including butadiene and finished styrene butadiene and BR was limited, and the price was stable. According to the latest data released by Zhuochuang, the domestic operating rate of all-steel radial tires was 60.6%, down 15.6% week-on-week and 4.7% year-on-year. It is expected that most production lines will enter the holiday next week, and the operating rate will further decline.

Futures Operation Advice: The SHFE rubber went strong with chemicals and black futures. As for the long position of RU05, it is advised to set a stop at the recent low level at 13,140 below.

(For reference only)