Crude oil

The storage space determines the oil price. The outlook for production cuts is still full of uncertainty. Oil companies in OECD countries, especially the United States and Canada, are opposed to participating in production cuts. However, G20 member countries may package passive production cuts that have already occurred into active production cuts. We believe that the production cut of OPEC+ by 10 million barrels per day is unable to balance the amount of demand loss, the main purpose is to slow down the speed of oil accumulation, and change space by time. In addition, if Saudi Arabia and other countries reduce their production and cancel previous exports, it will release the tank capacity and reduce freight rates and traders will have more arbitrage space on floating warehouses (the global floating warehouse has an oil storage capacity of 400 million barrels, and already has 100 million barrels). Currently, crude oil is neither supply and demand pricing nor cost pricing, but storage space pricing. Pipeline oil now bears more pressure than ship cargo oil. The inland pipeline oil of Russia, the United States, Canada and other countries will be the main victims. This week it is expected that the EIA crude oil inventory data to be released tonight, especially Cushing inventory data, will increase significantly. Considering the tank capacity problem, we believe that WTI oil will be significantly weaker than Brent oil in the short term. In addition, while crude oil futures have rebounded sharply recently, the discounts of crude oil spot continue to fall, causing divergences between futures and spot. We believe that this phenomenon cannot be sustained. Therefore, even if oil prices rebound, the weak spot market will limit futures price rebounds. Although crude oil spot prices are based on futures pricing, spot prices are the ballast of futures, and futures prices cannot continue to deviate from the fundamentals 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 near-month contract is recommended for Brent oil. Guard against risks that epidemic is under control and OPEC achieves agreement to cut output.

Raw materials of Polyester

Affected by the recent continuous rebound of crude oil, yesterday the domestic polyester raw materials opened higher first, but then fluctuated and gradually went down, and the pressure above was obvious. From the demand side, the terminal production and sales rate continued to improve last week, the finished product inventory of polyester enterprises was digested to a greater extent, and the quotation rose sharply, and the staged bottoming demand became the main driving force. Insufficient foreign trade orders will suppress the continued rebound in demand. In addition, at the current stage, the profits of both the PX and PTA terminals are well. The profit of naphtha-made MEG exceeds $80 per ton, and the relatively high profit will prompt the supply to maintain a high level. Overall, we believe that there is limited room for PTA and MEG to continue to rebound, and there is a possibility of a second fall.

Iron ore

The iron ore fluctuated yesterday. The current spot price of golden bubba powder in the port is equivalent to about ¥675, and the futures transaction is not smooth due to the large discount. The arrival volume in the port this week has rebounded significantly. From the shipping schedule, it is estimated that the arrival volume will be higher in the next few weeks. The demand will gradually land as the demand for terminal steel decreases, and the drag on the iron element will also begin to show. The domestic production reduction is not obvious, and the pressure is expected to increase from the end of April to May. The bearish trend of iron ore will exist in the medium to long term. It is still necessary to control the position in operation and pay attention to the recurrence due to the epidemic situation in the main producing country and the excessive discount.

Natural Rubber

Overseas rubber went up slightly. The main force contract of TF07 rose by 1.5 or 1.37% to 110.9. The main force contract of JRU09 rose by 1.9 or 1.29% to 148.8. The SHFE rubber was relatively strong and fluctuated. The main force contract of RU09 rose by 195 or 2.02% and closed at 9,865, and the main force contract of NR05 rose by 140 or 1.83% and closed at 7,805. There were limited inquiries for Qingdao rubber in USD. The quoted price of RSS3 was $1,400 per ton. The spot price or CIF of STR20 was $1,090 to $1,110 per ton. The CIF of SMR20 in August was $1,130 per ton. The CIF of mixed rubber from Thailand in August was $1,150 per ton.

Yunken Net News: According to news on April 5, Thailand announced that it will implement an anti-epidemic curfew prohibiting people from leaving their homes from 10:00 p.m. to 4:00 a.m. from April 3, which has an influence on the tapping process of domestic rubber. The country's epidemic situation management center has been informed of the work of rubber farmers and has granted a grace. Rubber farmers can still go to rubber plantations for tapping during the curfew, but they must report to the township head, village head, town head and other local officials for record until the epidemic is lifted.

In the 13 months from February 2019 to March 2020, the cumulative rainfall in Yunnan was 916.11 mm, which was the third lowest in history and 19.3% less than the normal value. In terms of synthetic rubber, the BR price stabilized, but the supply of butadiene was relatively ample. The upward trend of crude oil has limited stimulus to butadiene. In the downstream replacement market, dealers reported that the effect of the online marketing model is acceptable.

Futures Operation Advice: In terms of the long position in the main RU09 contract, it is advised to stop profit and pay attention to the suppress at 9,940 recently.

(For reference only)