Crude oil

International crude oil rebounded slightly yesterday, continuing the rebounding trend from the bottom. A report released by the International Energy Agency yesterday showed that due to the impact of China’s domestic epidemic, global oil demand will decline year-on-year in the first quarter of this year. However, as the impact of the epidemic weakens, demand will gradually return to normal after the second quarter. In addition, it was reported yesterday that Russia has almost hinted that all OPEC+ member countries are in favor of further production cuts. Overall, the current oil price is already relatively low, and long strategies is more recommended.

Raw materials of Polyester

Yesterday, the main PTA2005 and MEG2005 contracts in China continued to fluctuate in a narrow range, and trading prices increased slightly. From the downstream situation, as the terminal failed to resume work normally and logistics is blocked, the current overall operating rate is still low, but there is limited room for further reduction in the later period. Once the above problems are resolved, demand may continue to rise. In addition, as far as PTA and MEG are concerned, considering the decline in profits and weak demand, the operating rate of enterprises will gradually decline to hedge against the pressure of relatively excess supply, and the operation of the device will still be the focus in the short term. Therefore, in terms of operation, considering the overnight surge of the oil price, it is advised to hold the long position bought at the bottom previously.

Iron ore

The iron ore price rebounded due to the expected repair of the market, and Vale is unlikely to ensure full supply in 2020, so the market is expected to adjust the supply and demand structure in 2020. On the demand side, due to the overstocked inventory of steel mills, some steel mills have implemented production reductions. According to the data released by Mysteel this week, the production of sample steel mills reduced to 9.01 million tons, which was at a low of the same period in the past three years. Non-reduced steel mills also reduced replenishment demand in the short term due to the large inventories before the festival. The decline in demand was greater than supply contraction, and the overall environment was still negative. However, from the perspective of absolute prices, if the delivery superior and price difference of golden bubba powder are taken into account, the main contract price which was $80 per ton, which was equivalent to futures price above 630 yuan per ton was relatively too high for spring.

Natural Rubber

The quoted price for Qingdao rubber in USD retreated slightly with active inquiries. The quoted price of RSS3 in the bonded area was $1,600 to $1,620 per ton. The CIF of STR20 in April was $1,380 per ton. The CIF of SMR20 in August was $1,410 to $1,415 per ton. The CIF of mixed rubber from Thailand in June was $1,420 per ton. Overseas rubber fluctuated. The main force contract of TF05 fell by 0.2 or 0.15% to 136.0. The main force contract of JUR07 rose by 1.3 or 0.71% to 183.3. The SHFE rubber was relatively and fluctuated. The main force contract of RU05 fell by 20 or 0.17% and closed at 11,430, and the main force contract of NR04 was fell by 40 or 0.41% and closed at 9,620.

Xinhua News Agency: According to the statistics on key enterprises released by the China Association of Automobile Manufacturers, China’s auto production in January was 1.783 million, down 33.5% month-on-month and 24.6% year-on-year; sales in January was1.941 million units, down 27% month-on-month and 18% year-on-year. Among them, the production and sales of new energy vehicles are expected to be 40,000 and 44,000 units respectively, a year-on-year decrease of 55.4% and 54.4%. Chen Shihua, deputy secretary general of CAAM, believes that this year's Spring Festival holiday is in January, and some plants took holidays in advance, and fewer effective working days are the main reason for the decline in China's automobile production and sales in January.

Synthetic rubber continued to weaken, and the trading quotation was reverse in terms of the ex-factory price, while the buying force was still not too much and difficult to improve. According to the latest data released by Zhuochuang, the domestic all-steel operating rate was 35.6%, a year-on-year reduction of 48.7%. Tire production lines have resumed production this week, but poor logistics and insufficient staff were the objective reasons for limiting the start-up load, and the pressure on finished products was greater.

Futures Operation Advice: The SHFE rubber was relatively weak and fluctuated with commodities, and its trend was like black futures. As for the main contract of RU05, it is advised to hold the long position and set a stop at the recent low level at 11,340 below.

(For reference only)