Affected by the epidemic, global refineries may reduce production significantly. With the plunge in demand, the decline in production profits and the impact of the government's isolation policy, global refineries are entering unknown areas. During February, the processing capacity of Chinese refineries decreased by 3 million barrels per day compared with the same period last year, accounting for 20% of the domestic annual production capacity. According to this ratio, the reduction of global crude oil processing volume in the future will be very significant, especially in the United States market, because gasoline consumption exceeds 50% of the total consumption of refined oil. Under the current market conditions, Refineries can convert part of gasoline and jet fuel to diesel or fuel oil, but will have to reduce the processing capacity after the product oil storage capacity is full. From the view of time, due to the production increase in Saudi Arabia and other countries since April, global refineries will also begin large-scale production cuts from April, which will lead to very rapid accumulation of crude oil. 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
Yesterday, the domestic polyester raw materials continued the previous downward trend and rebounded after reaching a staged low during the day. The trading volume and positions increased sharply. The divergence between long and short positions was obvious. Due to the continuous spread of overseas epidemics, the export of textiles and clothing has been greatly impacted, and the demand side is facing significant pressure. In addition, the price of naphtha fell more than the downstream price this week, which caused the processing profits of PTA and MEG to rise instead of falling. The price difference between PX and naphtha remained at $290 per ton yesterday. The processing fee of PTA spot was ¥640 per ton, and the production profit of naphtha-based MEG was $80 per ton. Therefore, although the absolute prices of polyester raw materials are at historically low levels, oversupply pressure caused by the expansion of production profits will still suppress prices. Overall, the trend of PTA and MEG is still weak relatively.
The iron ore rebounded yesterday and led the technical curve repair. The short-term epidemic situation in Brazil and South Africa still has uncertainties on the supply side, so the rebound after the extreme decline is reasonable. With the spread of the epidemic, the global demand for terminal industrial materials has been reduced, and under the relatively rigid supply pattern, the iron element will be transformed into a surplus situation, and it is bearish on iron ore in the medium and long term. In the short term, the market still has concerns about supply uncertainty. Position management and operation on back month contracts are recommended. Yesterday Platts rebounded by $4.1 to $84.3, and the spot price of golden bubba powder at the port is equivalent to¥666 per ton.
Overseas rubber fluctuated at the bottom. The main force contract of TF06 rose by 1.9 or 1.73% to 115.5. The main force contract of JRU08 fell by 5.1 or 3.31% to 148.9. The SHFE rubber went down. The main force contract of RU09 rose by 130 or 1.35% and closed at 9,760, and the main force contract of NR05 rose by 150 or 1.92% and closed at 7,950. The quoted price for Qingdao rubber in USD retreated slightly with weak inquiries. The quoted price of RSS3 was $1,520 per ton. The spot price or CIF of STR20 was $1,160 per ton. The CIF of SMR20 in June was $1,180 per ton. The CIF of mixed rubber from Thailand in July was $1,200 per ton.
Tire World Network news: 1. Bridgestone's tire factory in Europe began to stop or reduce production. Among them, the production of tire bases in France and Italy has ceased, and production of tire factories in Belgium, Hungary, Poland and Spain has been reduced. The Bridgestone Americas plant has been closed or reduced from March 21; 2. Pirelli Tires announced that its plants in the UK, Italy and Romania have suspended production temporarily, and its US plant has been closed before; 3. Apollo Tire decided to suspend all production activities at the Hungarian plant while reducing production at the Dutch plant. 4. Cooper Tire announced that it will close production plants in Europe to protect employees' health and safety. A few days ago, the company had suspended operations in the Americas.
Today is the Indonesian Quiet Day and the local market is closed. In terms of synthetic rubber, as butadiene and the SHFE rubber have weakened one after another, panic has spread in the HCBR market, and the sales company's offer has approached ¥8,000 per ton. As of March 10, the TOCOM delivery inventory in Japan had been reduced by 407 tons to 10,625 tons, of which 738 tons were into the warehouse and 1,161 tons were out of the warehouse. It is unusual for ex-warehouse quantity to exceed 1000 tons. Combined with the warehousing peak 14 months ago, the rubber in Japan is currently at the peak of warehouse discharge.
Futures Operation Advice: In terms of the main RU09 contract, it is advised to hold the long position and set a stop at 9,660 below.
(For reference only)