The discount of the nearby month contracts of US crude oil reached a new high. Since April, WTI's rapid increase in discount in the nearby month contract has caused market attention. As of yesterday, the discount of WTI contract for May in terms of the contract for June has reached $6 per barrel. We believe this mainly reflects two aspects of information: 1. The spot price is too weak, the price in the nearby month contract is closer to the spot price, and the current US pipeline oil spot market price is already very weak; 2. Recently, the inventory in Cushing has rapidly increased, and it may reach the upper limit of tank capacity in a relatively short time. The price difference between oil in Cushing and Midland and oil in Cushing and Houston have already experienced a large rise. Therefore, the crude oil in the Permian basin will flow to Cushing and crude oil in the north area (Canada, Bakken, etc.) will stay in Cushing instead of going further south, and oil price in Cushing has become high point of the triangular pricing area, and the remaining storage capacity of the Cushing delivery site has a high probability of being booked, so it is impossible to build a risk-free cash and carry arbitrage strategy (the delivery rule in Cushing is not similar to a domestic warehouse receipt delivery system, and renting own tank is needed for oil storage). In terms of operation, it is advised to maintain the neutral and relatively bearish strategy. Reverse cash and carry arbitrage strategy to long the back-month contract and short the near-month contract is recommended for WTI oil. Guard against risks that epidemic is under control and supply disruptions are caused by geopolitical events.
Raw materials of Polyester
Yesterday, the domestic polyester raw material futures price opened higher, but it showed a clear trend of opening higher first and then going down, and eventually fell by more than 2%, and the short-term rebound was suppressed. On the demand side, the terminal production and sales rate remained weak yesterday, and short-term demand was under pressure after the early speculative buying disappeared. From the perspective of the supply side, whether it is PTA or MEG, the negative processing profits remained high and has become the primary factor for suppressing prices. Overall, we believe that the future price of polyester raw materials is still facing downward risks.
We still believe that the epidemic will lead to a decline in global demand for iron elements and lead to long-term iron ore surplus. The short-term rebound is mainly due to large discounts and insufficient accumulation of spot pressure. As for the supply side, according to the shipping schedule, the arrival volume is expected to be high this week and in the following weeks. As the demand for terminal steel declined, the demand side will reduce production, and the reduction of production of international steel mills will increase, and domestic steel mills will have significant pressure from the end of April to May. It is expected that the contradictions will increase significantly by then, and the iron ore market will still be bearish. At present, the current spot price of golden bubba powder in the port is about ¥700 per ton, and PB powder is about ¥710 per ton.
Overseas rubber was relatively weak and fluctuated. The main force contract of TF07 fell by 1.0 or 0.88% to 113.1. The main force contract of JRU09 fell by 2.0 or 1.32% to 149.8. The SHFE rubber opened higher first and then went down. The main force contract of RU09 fell by 200 or 1.97% and closed at 9,940, and the main force contract of NR05 fell by 260 or 3.15% and closed at 8,005. The quoted price for Qingdao rubber in USD fell by $10 to $15 per ton with general inquiries. The quoted price of RSS3 was $1,420 to $1,430 per ton. The spot price or CIF of STR20 was $1,130 to $1,150 per ton. The CIF of SMR20 in August was $1,170 per ton. The CIF of mixed rubber from Thailand in August was $1,190 per ton.
CCTV News: On April 10, in Thailand, the Chairman of the CAT, Mr. Bray Pan, revealed that the CAT decided to invest 35 billion baht (about 7.6 billion yuan) in the second stage of the rubber industry aid budget to ease the economic pressure of rubber farmers affected by the COVID-19 and ensure the rubber income above 60 baht per kg. The CAT had invested 25 billion baht (about 5.43 billion yuan) in the first stage, benefiting more than 1.7 million rubber farmers.
It is the birth of Ambedkar in India and the Buddha New Year in Laos and Cambodia, and the above regions are closed. Recently, there are many festivals in the main producing areas, and the supply decreased during this period. In the first half of April, the rainfall throughout Thailand was acceptable at 1.49mm, and the 90-day cumulative rainfall decreased by 7% year-on-year, and the decline continued to ease from 49% in March and 62% in February.
Futures Operation Advice: As for the main RU05 contract, it is advised to long a slight position at the current level, and set a stop at the previous high level at 9.820 below.
(For reference only)