Crude oil

The outlook for global demand has deteriorated further, and the inventory is expected to increase significantly. As more countries such as the United States, the United Kingdom, India, and other countries implement measures such as home quarantine to respond to the epidemic, the outlook for global oil demand has further deteriorated. At present, the major institutions’ demand growth forecasts for March and April have been significantly reduced. Demand in March is expected to drop by more than 10 million barrels per day year-on-year, and that in April is expected to drop by more than 15 million barrels per day in April. According to Energy Aspect's estimates, the increase in global oil inventories will exceed 1 billion barrels in the first half of this year. According to data from institutions such as Kayrros, the remaining global tank capacity is about 1.7 billion barrels (excluding underground strategic reserves). We believe that if the epidemic situation is not controlled in June, it will not be ruled out that the global tank capacity will be tight. Considering the time lag, we believe that the inventory is expected to see a rapid increase in high-frequency oil data in April. 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 near-month 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 main domestic PTA2005 contract stopped falling and stabilized, while the main MEG2005 contract continued the weak downward trend. 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. The price difference between PX and naphtha remained at $290 per ton below yesterday. The processing fee of PTA spot fell to ¥590 per ton, and the production profit of naphtha-based MEG fell to $60 per ton around. 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.

Iron ore

Yesterday, the iron ore rebounded due to concerns about uncertainties such as the closure in South Africa and the short-term Brazil epidemic, which was reasonable in the current uncertain situation. 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 terms of operation, the near-month contract is more affected by supply uncertainty, so position management and operation on back-month contract are recommended. The spot price of golden bubba powder at the port is equivalent to¥666 per ton.

Natural Rubber

Overseas rubber retreated slightly. The main force contract of TF06 rose by 1.3 or 1.17% to 112.8. The main force contract of JRU08 rose by 2.3 or 1.52% to 153.2. The SHFE rubber rose slightly at close. The main force contract of RU09 rose by 155 or 1.59% and closed at 9,915, and the main force contract of NR05 rose by 110 or 1.38% and closed at 8,060. The quoted price for Qingdao rubber in USD was stable with normal 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 August was $1,210 per ton.

Tencent Automotive News: Latest research from IHS Markit shows that as the coronavirus spread globally, the closure of multiple automotive plants in Europe, North America and Latin America may reduce global vehicle production by more than 1.4 million vehicles this year . Auto plants around the world have announced that they will temporarily suspend production. In Europe, the automotive assembly business will be suspended for an average of 13 working days. Temporary suspension will reduce car production by more than 880,000 units. IHS Markit estimates that an average of six days of downtime at North American plants will reduce the automobile production by 480,000 units.

According to the survey of tropical crop cultivation technology services in Yunnan, the tapping process in Yunnan will be carried out in stages (March 23 to March 30, April 5 to April 20, and mid-to-late April) to scientifically cope with drought and pests. Citing a third-party survey, the inventory outside the Qingdao Bonded Zone in China is still accumulating, which is currently at 520,000 tons, a year-on-year increase of 5.6%.

Futures Operation Advice: In terms of the main RU09 contract, it is advised to hold the long position and set a stop at the recent low level at 9,660 below.

(For reference only)