Crude oil

Overnight international crude oil showed a clear rebound trend from the bottom, and technical adjustments were completed within the day. Due to the domestic epidemic, the growth in global crude oil demand will decline significantly this year, and the previous OPEC+ proposal to further reduce production will hedge the decline in demand to a certain extent. So far, Russia has not stated its attitude, but there are news that its attitude will be announced in the next few days. In addition, since mid-January, due to the blockade of ports and oil fields, production in Libya has continued to decline, which has also led to continuous reduction in OPEC's production. Overall, we believe that the current crude oil is still in a rebound trend, and it is more advised to maintain the previous long strategies.

Raw materials of Polyester

Yesterday, domestic PTA2005 and MEG 2005 contracts retreated from a high level of staged rebound, showing a trend of technical adjustment. On the demand side, yesterday, a small amount of polyester finished products was traded, and the quotation continued to decline. The terminal weaving enterprises slowly resumed work, it is expected that by the end of the month, the operating rate will rise to 50%. Due to the rapid contraction in the downstream, the inventory of PTA and MEG keeps accumulating, which has formed a significant pressure on prices to a certain extent. However, with the industry chain profits being continuously compressed, the willingness of PTA and MEG companies to reduce production and suspension has increased, thereby alleviating the pressure of relative oversupply. In general, with the slow recovery of demand in the later period, the price of polyester raw materials may rise steadily. In operation, it is advised to hold the long position bought at the bottom previously.

Iron ore

Iron ore has recently rebounded due to expected repairs, and arbitrage funds have further promoted the rhythm of the rebound. The spot price of golden bubba powder is equivalent to the futures price at ¥655 to ¥660 per ton, and the discount is small. As for the absolute price, according to the evaluation of supply and demand pattern in spring, the current price has reached a relatively high level of valuation. At present, the marginal supply of steel mills has no profit at current futures prices. Fundamentally, due to the inventory backlog of steel plants plus the impact of the epidemic, the production reduction area of steel mills is expanding. The short-term negative environment has not improved, and there is a tendency to deteriorate in March. Therefore, the market is no longer bullish, and it is advised for the long position to stop profit at the current price and focus on the short opportunity when futures funds turned weaker.

Natural Rubber

Overseas rubber fluctuated at high level. The main force contract of TF05 rose by 0.1 or 0.07% to 137.9. The main force contract of JUR07 fell by 1.0 or 0.54% to 185.8. The SHFE rubber retreated slightly. The main force contract of RU05 fell by 45 or 0.39% and closed at 11,630, and the main force contract of NR04 fell by 75 or 0.76% and closed at 9,780. The quoted price for Qingdao rubber in USD fluctuated with weak buying. The quoted price of RSS3 was $1,640 per ton. The spot price or CIF of STR20 was $1,385 to $1,400 per ton. The CIF of SMR20 in August was $1,435 per ton. The CIF of mixed rubber from Thailand in May was $1,425 to $1,430 per ton.

Ministry of Transport of China: The Ministry of Transport and the National Health Commission jointly issued a notice requesting that provincial competent departments of transportation and health in-depth implementation of the important instructions and spirits of General Secretary Xi Jinping on prevention and control of the new coronary pneumonia epidemic and maintaining normal economic and social order, practically simplify the application process for emergency transport vehicle permits for epidemic prevention and control, implement no isolation measures for emergency transportation support personnel, further improve transportation support work, and effectively support epidemic prevention and control and business resumption and production.

The synthetic rubber is running weakly, and it is difficult to obtain cost support at the raw material side for the gradual resumption of production in the downstream. The midstream market has sufficient circulation and the sales price is flat or reverse to the ex-factory price. Free tolls for notional high way will stimulate a recovery in logistics, thereby addressing the pressure on finished product inventory at tire factories. After a long period of production suspension, orders for each production line are enough, and production is being resumed.

Futures Operation Advice: The SHFE rubber retreated slightly. 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 11,570 below.

(For reference only)