EIA released inventory data yesterday, crude oil inventories unexpectedly declined, far exceeding market expectations and API data announced the day before yesterday, but oil prices showed a surge and fall. Although recently good news came out a lot, the overall performance of oil prices is weak. The upper space is difficult to open, basically in line with our previous judgments. At present, there are two main factors that suppress oil prices: on the one hand, the cash cost of US shale oil. If the oil price rises above $30 per barrel, shale oil production will appear. Recovery, and the current excess inventory in the market is high, and there is no need to increase supply to meet demand; on the other hand, the monthly difference of crude oil needs to maintain a certain degree of contango to provide economics for floating warehouses. If the monthly difference continues to rebound, it will make some stockpile arbitrage profitable exit the market, thus allowing inventory to flow into the spot market and putting pressure on prices. Therefore, at present, both the unilateral price and the monthly difference indicate that the oil price cannot rebound too fast, and it is expected that the short-term shock will continue to bottom. In terms of futures operation, it is advised to maintain the neutral strategy and wait and see temporarily.
The iron ore rose sharply first and then retreated over evening session, and the basis has narrowed significantly. At present, the spot in the port is equivalent to futures price at about ¥705, and the discount for the main contract is 9.2%. According to the shipping schedule, arrivals in this week and next week will be high relatively, and it is expected that the inventories in the port will stop falling. As the supply side gradually stabilizes, contradictions in the iron ore will be transferred to the demand side in the later period, the mid- to long-term supply and demand structure is expected to remain unchanged and go weak gradually. The recent epidemic in Brazil is still developing rapidly, and it is advised to focus on the unexpected impact on the supply side and market sentiment.
Terminal restocking space is limited, and polyester production and sales continue to be weak. The estimated balance sheet in May is still accumulating rapidly under the current high inventory background. Under the background of polyester export demand suppressed by the epidemic, it is necessary to lower the PTA processing fee to prompt PTA to reduce production to rebalance. In terms of operation, it is advised to wait and see for unilateral strategy; for the strategy across varieties, under the current maintenance plan, it is estimated that the accumulated inventory of PTA in May will be large, and its performance will be weak; for basis trading and strategy across period, the high inventory problem has not been resolved, and the 9-1 spread went down to the rolling window. It is advised to focus on the risks of unilateral volatility of recent crude oil prices, the turning point of the epidemic situation in the external market, the possibility of non-profit maintenance under the high production concentration of the PTA plant and the downstream restock space.
Overseas rubber went down. The main force contract of TF09 fell by 1.1 or 0.94% and closed at 115.5. The main force contract of JRU10 fell by 0.2 or 0.13% and closed at 152.1. The SHFE rubber retreated slightly. The main force contract of RU09 fell by 30 or 0.29% and closed at 10,215, and the main force contract of NR06 fell by 70 or 0.83% and closed at 8,315. The quoted price for Qingdao rubber was stable with general inquiries. The quoted price of RSS3 was $1,390 to $1,400 per ton. The spot price or CIF of STR20 was $1,160 to $1,170 per ton. The CIF of SMR20 in August was $1,195 per ton. The CIF of mixed rubber from Thailand in August was $1,210 per ton.
The Statistics Department of Malaysia: In March, Malaysia’s natural rubber production decreased by 23.3% from February to 36,000 tons. The export volume was 45,200 tons, a decrease of 12.8% from 5.19 tons in February. The country's main export destination for rubber is China, which accounts for 41.8% of its total exports in March, followed by Germany (9.3%), Iran (5.8%), the United States (5.7%) and Brazil (3.3%). The highest export value was rubber gloves, with an export value of 1.778 billion ringgit, an increase of 11.9% from February. In March, Malaysia’s natural rubber stocks increased by 1.4% from February’s 296,300 tons to 300,400 tons.
Today, Cambodia continues the holiday of the King’s birthday and the local market is closed. Due to powdery mildew in the Banna area in Yunnan, the tapping was postponed again. There is no market for local latex, which is reported to ¥8,600 to ¥8,900 per ton. In Indonesia, the epidemic will cause about 5.1 million people to return to poverty. Local rubber traders are suffering from shrinking orders from international tire traders. The long-term production of the processing plant is under the pressure of delayed shipment or even contract breach.
Futures Operation Advice: The SHFE rubber went weak with agricultural commodities. As for the main RU09 contract, it is advised to wait and see and focus on the support at the previous high level at 10,060.
(For reference only)