Crude oil

Under the continuing influence of demand concerns caused by the spread of new coronavirus pneumonia worldwide, overnight international crude oil fell for the third consecutive trading day, and US crude oil fell below the integer mark of $50 per barrel, and Brent oil prices also went down below $55 per barrel. The United States CDC issued a warning yesterday that it is necessary to prepare for the spread of new coronavirus pneumonia in the community, which has further exacerbated the panic in the market. Both stock and bond markets have fallen sharply and the market's risk aversion has increased. However, from the perspective of the supply side, most of Libya's domestic crude oil output is closed, coupled with the possibility of OPEC+'s potential deepening of the production reduction agreement, which may offset the decline in demand. Overall, we believe that the bearish sentiment in the market is still obvious in the short term, but the role of the supply side cannot be ignored when the oil price is relatively low. Unless the epidemic explodes again, there is limited room for oil prices to fall sharply again.

Raw materials of Polyester

Affected by the plunge in oil prices on Monday, the main domestic PTA2005 and MEG2005 contracts opened at a low price yesterday, and gradually fluctuated and rebounded after going down, and they did not drop significantly at the close. As far as PTA is concerned, the spot processing fee was about ¥350 per ton yesterday, but the futures processing cost of the 2005 contract was still ¥550 per ton, which puts selling pressure on the contract. From the perspective of MEG, the port inventories of East China region announced yesterday rose again, but the absolute volume is still near the past average, and various processing systems were still at a loss. In general, we believe that PTA and MEG may be under pressure due to the decline in oil prices. However, given the rebound in demand and the low profits of factories, the room for price decline is also limited. In terms of operation, it is advised to temporarily hold the long position bought at the bottom previously.

Iron ore

From a fundamental point of view, as prices rebound, favorable conditions are gradually included in prices, and the main focus in the later period is whether steel mills have effectively reduced production. It is expected that with the increase in the capital pressure and destocking of steel mills, the reduction of production will still expand the scale. Currently, the reduction in production is still not obvious under the slight profit loss of steel mills, and the contradiction of iron ore demand might still not be outstanding until the steel pressure appears. At present, the futures valuation o for the spring demand after the epidemic has been relatively high, but the rhythm of futures is greatly affected by funds, and traders also took the initiative to sell, so it is still difficult to grasp the rhythm, and the trend of iron ore is expected to follow the steel.

Natural Rubber

Overseas rubber rebounded. The main force contract of TF05 rose by 2.0 or 1.49% to 135.8. The main force contract of JUR07 rose by 0.5 or 0.27% to 184.8. The SHFE rubber rebounded. The main force contract of RU05 rose by 145 or 1.27% and closed at 11,545, and the main force contract of NR04 rose by 135 or 1.41% and closed at 9,715. The quoted price for Qingdao rubber in USD rose by $5 to $10 per ton with scarce inquiries. The quoted price of RSS3 was $1,620 per ton. The spot price or CIF of STR20 was $1,380 per ton. The CIF of SMR20 in August was $1,415 per ton. The CIF of mixed rubber from Thailand in May was $1,420 per ton.

Tonghuashun news: On February 24, Cooper Tire and Rubber announced its financial report. The report showed that the company's net profit attributable to ordinary shareholders of the parent company was 51.258 million US dollars for the fourth quarter of fiscal 2019, an increase of 12,333.41% year-on-year; the revenue was 750 million US dollars, a year-on-year decrease of 2.63%.

In terms of latex, the main overseas production areas are gradually entering the cut-off season. There is no pressure on factory sales, and the prices of basic raw materials and domestic finished products are relatively strong. COVID-19 is spreading overseas, and the German Industry Federation announced that it will cause a shortage of car production in the eastern region of Germany in the coming weeks, which is a microcosm of the overseas market and has a bearish impact on rubber consumption.

Futures Operation Advice: The SHFE rubber rebounded with commodities. As for the main RU05 contract, and it is advised to be cautious and focus on the pressure at the recent low level at 11,670 above.

(For reference only)