Crude oil

The INE raised the storage fees for crude oil futures. As the market expects the exchange to adjust the delivery warehouse storage fees in advance, the monthly spread of contracts after June will widen. In addition, the exchange will expand the delivery warehouse storage capacity again. We believe that from the perspective of the exchange, various measures want to make the pricing of the internal market return to rational. At present, the premium in the domestic futures is still high. Considering that Basra’s OSP is lowered, the profit of the long-term delivery of the long contract to the domestic futures is as high as $16 per barrel, which reflected the serious divergence between external and internal markets. In addition, due to the intra-tank delivery and warehouse receipt delivery regulation, it is difficult to open the discount of the domestic contract in nearby month, the curve of crude oil contracts in back months is seriously distorted, and it cannot reflect the current fundamentals of the spot market. The increase in storage fees will widen the intertemporal spread, but it is limited by the system of warehouse receipt delivery and in-tank delivery, and the monthly spread of domestic contracts cannot widen like overseas market. Especially in nearby months, because once the window for cash and carry arbitrage strategy is opened, risk-free arbitrage funds will be attracted into the market with no need to consider the storage capacity problem. The reason is that when the current storage capacity becomes a scarce resource, the intra-tank delivery and warehouse receipt delivery systems cannot reflect the current scarcity of storage resources. We believe that for the long-term development of crude oil futures, the delivery system needs to be fundamentally reformed. 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.

Raw materials of Polyester

Yesterday, domestic polyester raw materials continued the volatile trend, the main 2009 contract of PTA fell slightly, and MEG was stronger. From the demand side, the recent sluggish terminal production and sales rate will become the primary factor in suppressing the price of polyester raw materials. Later, it is necessary to pay attention to the progress of overseas resumption and production to judge whether the foreign trade orders can recover to a certain extent. As far as the supply side is concerned, the high processing profits of PTA and PX continues. The decline in the operating rate under the heavy loss of the coal-made MEG process eases the supply pressure, but the profit of naphtha chain is still well. Overall, we believe that the recent trend of MEG may be relatively stronger than PTA, but it is difficult for both them to have a clear unilateral market.

Iron ore

Yesterday the market rumors that the production limit in Tangshan was increased caused large fluctuations in the price of iron ore in the market. The recent rebound has benefited greatly from discount of futures price and the push of funds. Up to now, the current spot price of golden bubba powder in the port and the plats price are equivalent to futures price at about ¥700 per ton, the discount in nearby month has narrowed to about 2%, which can basically be regarded as the recovery of basis. Fundamentally, the epidemic will lead to a decline in global iron demand and a long-term surplus of iron ore. Affected by the increase in shipments from Brazil and the upward transmission of steel pressure, the contradiction of the iron ore is expected to increase significantly from the end of April to May. It is expected that iron ore will turn weak again in the short term.

Natural Rubber

Overseas rubber was relatively weak and fluctuated. The main force contract of TF07 fell by 0.8 or 0.70% to 114.2. The main force contract of JRU09 fell by 1.1 or 0.72% to 151.2. The SHFE rubber went down weakly. The main force contract of RU09 fell by 155 or 1.54% and closed at 9,880, and the main force contract of NR06 fell by 160 or 1.95% and closed at 8,060. The quoted price for Qingdao rubber in USD fell by $5 to $10 per ton with scarce inquiries. The quoted price of RSS3 was $1,420 per ton. The spot price or CIF of STR20 was $1,140 to $1,155 per ton. The CIF of SMR20 in August was $1,180 per ton. The CIF of mixed rubber from Thailand in August was $1,190 per ton.

Thai Headlines: the Thai International Trade Negotiation Director Alamon said that, from January to February, Thailand exports rubber products and finished products, such as car tires, rubber gloves, rubber bands, synthetic rubber bands, etc. Trade exports amounted to US $1.969 billion, an increase of 10% over the same period last year. This is mainly because 14 free trade agreement partners did not impose import duties on Thai rubber products, including 9 ASEAN countries, Japan, Australia, New Zealand, Peru and so on. And China, South Korea, India, Chile still levy import tax, for example, China, South Korea levy 5% import tax on Thailand synthetic rubber.

Citing Jinlianchuang's investigation on the upstream, this year, the main producing countries in Southeast Asia are affected by the epidemic, and the rubber tapping time is delayed, and the output will be reduced after the tapping. According to the data released by Zhuochuang, the domestic all-steel operating rate was 63.9%, up 2.7% week-on-week and down 14.7% year-on-year. The completion of the overhaul of production line boosted the operating rate while the export contraction suppressed the operating rate. The shift of tire production capacity from export to domestic sales has also made domestic competition increasingly fierce, and price promotions are endless.

Futures Operation Advice: As for the main RU09 contract, it is advised to long a slight position, and set a stop at the previous high level at 9.820 below.

(For reference only)