Crude oil: IEA estimated that the oil storage capacity will reach the limit by the middle of the year. Judging from the Saudi OSP announced this week, Saudi Arabia’s official export prices in Asia have been further lowered, and the decline is higher than market expectations, which indicates that the logic of the price war is not completely lifted, and the production cut agreement cannot prevent the oil market from continuing to slide into the abyss. According to the monthly report released by the IEA yesterday, demand fell by 29 million barrels per day in April year-on-year and 26 million barrels per day in May, which cannot be offset by the reduction volume of OPEC++. IEA estimates that the global capacity limit will be reached in June this year. In the short term , We believe that the crude oil market still needs to be rescued by the rebound in demand, and with the spread of overseas epidemics, some countries such as India and Europe have further extended the home quarantine time, which will undoubtedly further drag the pace of demand recovery, we believe it cannot be taken lightly that the darkest moment of the crude oil market has passed. 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-month contract is recommended for WTI. Pay attention to the risk that epidemic is under control and supply disruptions are caused by geopolitical events.
Raw materials of Polyester
Yesterday, domestic polyester raw material prices fluctuated, and the trend was relatively stronger than crude oil. However, the terminal production and sales rate remained weak yesterday, and short-term demand was under pressure after the early speculative buying disappeared. Despite the rapid decline in the inventory of polyester finished products, it is more about the transfer of inventory than real digestion. The severe situation of foreign trade will impact the overall demand. 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.
Yesterday the futures price rallied first and then retreated, and the position showed that this week was obviously pulled by funds, mainly due to the discount of futures and insufficient accumulation of spot pressure. Yesterday, the spot price of golden bubba powder in the port is equivalent to futures price at about ¥700 per ton, and PB powder is equivalent to futures price at ¥715 per ton. Fundamentally, the epidemic will lead to a decline in global demand for iron elements and lead to a long-term logic surplus of iron ore. By the increase in Brazilian shipments and steel pressure upward transmission, it is expected that the contradiction will increase significantly from the end of April to May. It is advised to control the position and wait and see with the contradiction accumulating.
Overseas rubber was relatively strong and fluctuated. The main force contract of TF07 fell by 0.1 or 0.09% to 115.0. The main force contract of JRU09 rose by 0.9 or 0.59% to 152.3. The SHFE rubber fluctuated. The main force contract of RU09 fell by 25 or 0.25% and closed at 10,035, and the main force contract of NR06 fell by 65 or 0.78% and closed at 8,220. The quoted price for Qingdao rubber in USD fluctuated with scarce inquiries. The quoted price of RSS3 was $1,420 to $1,430 per ton. The spot price or CIF of STR20 was $1,140 to $1,160 per ton. The CIF of SMR20 in August was $1,190 per ton. The CIF of mixed rubber from Thailand in August was $1,200 per ton.
QinRex: In March, China imported a total of 602,000 tons of natural and synthetic rubber (including latex), an increase of 3.6% year-on-year. From January to March, China imported a total of 1.659 million tons of natural and synthetic rubber (including latex), an increase of 5.6% from 1.571 million tons in the same period of 2019.
Today Laos continues the Buddha New Year and the local market is closed. In terms of concentrated latex, supported by the supply during low-yield season in Thailand, the CIF in USD did not fluctuate much, and the external and internal reverse continued. Due to export restrictions on individual domestic tire production lines, finished product inventories accumulate. The trading of replacement market has retreated from the small peak of resumption of production, and dealers have reported that sales volume has declined significantly compared with March.
Futures Operation Advice: As for the main RU09 contract, it is advised to hold a slight position and wait and see, and set a stop at the previous high level at 9.960 below.
(For reference only)