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Daily Market Review on Specified Futures Products 2020.03.17

Fang submitted 2020-03-17 10:15:57

Crude oil

The United States will replenish its strategic reserves, which has limited support for the oil market. As the epidemic continues to worsen overseas, the United States has extended the travel ban to the United Kingdom and Ireland, and European countries have begun to increase traffic control and quarantine measures (such as suspension of French elementary and secondary schools, restaurant closures, etc.). The outlook for oil demand has further deteriorated. Institutions continue to reduce demand growth, FGE lowered its demand growth estimate from -500,000 barrels per day to -1,300,000 barrels per day. The latest research report by Goldman Sachs predicts that the global supply and demand surplus will reach 6 million barrels per day in the second quarter. In the first half of the year, the global accumulated inventory is expected to be about 0.8 to 1.2 billion barrels. At present, the market has begun to worry about the tightness of global tank capacity. It is unrealistic to hope that the US and India's SPR replenishment will support oil prices, which is inconsistent with the huge surplus. In contrast, the incremental demand brought by SPR replenishment is very limited, and it cannot completely solve the problem of global tank capacity tension in the future. In terms of futures operation, it is advised to maintain the short strategy; reverse cash and carry arbitrage strategy to long the back month contract and short the nearby contract is recommended for Brent oil. Guard against risks that epidemic was under control and OPEC reopens agreement to cut output.

Raw materials of Polyester

Affected by the spread of overseas epidemics and the plunge in oil prices, the domestic main PTA2005 and MEG2005 contracts continued the downward trend yesterday, and PTA fell below the low level on March 10 in the intraday, and the latter was relatively resilient. From the demand side, the operating load of downstream polyester companies has rebounded to around 80%, but the terminal recovery process has been slow, which has led to the inventory of polyester finished products still at historical highs. As far as PTA is concerned, the spot processing fees exceeded ¥600 per ton yesterday, and the price difference between PX and naphtha skyrocketed to around $320 per ton, and the recovery of industry chain profits will suppress the price of PTA. From the MEG perspective, port inventory in East China increased by another 100,000 tons to 1.05 million tons yesterday. The rapid accumulation of inventory and the repair of production profits have all formed important obstacles to prices. Therefore, the price of polyester raw materials may continue to seek support in the short term.

Iron ore

Sentiment in the iron ore market has fluctuated sharply recently. The price is still at the upper edge of the oscillating range since September 2019. Due to low arrivals previously, port inventory continued to decline, which is conducive to supporting market confidence. In the medium term, unless there is a large reduction in the supply side, it does not have the conditions to continue to rise. At present, from the perspective of shipments, the number of Australian arrivals this week will return to normal levels, and port inventory is expected to stop falling. In addition, there are concerns about the impact of the epidemic in Brazil on iron ore supply. Due to the high degree of mechanization of iron ore production and transportation, the probability of being significant affected is expected to be low, and the impact of declining demand is occurring, so we believe that there is a greater risk of decline in iron ore price. The current port price of golden bubba powder is equivalent to ¥692 per ton, and the futures price was at a discount of about 4.5%.

Natural Rubber

Overseas rubber fluctuated slightly. The main force contract of TF06 fell by 2.0 or 1.58% to 124.6. The main force contract of JUR08 fell by 0.4 or 0.25% to 161.8. The SHFE rubber fluctuated weakly. The main force contract of RU05 fell by 230 or 2.18% and closed at 10,310, and the main force contract of NR05 fell by 270 or 3.02% and closed at 8,680. The quoted price for Qingdao rubber in USD fell by $10 to $20 per ton with normal inquiries. The quoted price of RSS3 was $1,580 per ton. The spot price or CIF of STR20 was $1,270 to $ 1,285 per ton. The CIF of SMR20 in August was $1,320 per ton. The CIF of mixed rubber from Thailand in July was $1,315 per ton.

CAAM: Affected by the epidemic, China’s auto production and sales in February showed a significant month-on-month decrease and a year-on-year decrease. The auto production this month were 285,000 units, down 83.9% month-on-month and 79.8% year-on-year; the auto sales this month were 310,000 units, down 83.9% month-on-month and 79.1% year-on-year. From January to February, the production of new energy vehicles were 54,000 units, down 63.8% year-on-year; the sales of new energy vehicles were 60,000 units, down 59.5% year-on-year. Among the main varieties of new energy vehicles, production and sales of pure electric vehicles and plug-in hybrid vehicles both fell by more than 50% year-on-year.

The dry climate in Thailand has continued, and light rain has only been observed in Yala Province recently. The six-month cumulative rainfall in the local area decreased by 26% year-on-year. The operating rate of downstream tire production lines continued to increase, with individual high-level operations reaching 90% and low-level operations at 50%. At present, it is still filling up the vacancies in the previous production capacity and the inventory of finished products has decreased.

Futures Operation Advice: The SHFE rubber went down weakly like the trend of non-ferrous futures. As for the main RU05 contract, it is advised to wait and see and pay attention to the support at the recent low level at 10,230 below.

(For reference only)

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