Crude oil

The recent reduction in supply in the oil market exceeded expectations. In OPEC+, the implementation of production cuts has been faster. The crude oil exports of core oil-producing countries such as Saudi Arabia, the UAE and Kuwait have declined significantly, and Russia has also reduced production to about 9.5 million barrels per day. The intensity and speed of the production cuts far exceeded expectations, and even the major cheating producer, Yira, also plans to cut about 700,000 barrels per day. In terms of non-OPEC, the United States, Canada, Brazil and Norway will all achieve production cuts of varying magnitudes. Overall, global production fell by 12 to 13 million barrels per day in May. We believe that although it is not enough to fully offset the decline in demand, it has avoided that the global storage capacity limit will be reached in the short term. But for now, the oil price ceiling is still difficult to open. The core problem is that the rebound of WTI prices to $30 per barrel will lead to a recovery in U.S. supply. The market still does not need an increase in supply to meet demand under the current situation of large inventories. In terms of futures operation, the crude oil is expected to fluctuate and build a bottom, and it is advised to maintain the neutral strategy and wait and see temporarily.

PTA

The production and sales of Polyester rebounded slightly, and terminal loom load slightly improved. 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.

Natural Rubber

Overseas rubber fluctuated weakly. The main force contract of TF09 fell by 0.3 or 0.26% and closed at 115.1. The main force contract of JRU10 fell by 1.0 or 0.66% and closed at 151.1. The SHFE rubber rebounded at close. The main force contract of RU09 rose by 30 or 0.30% and closed at 10,170, and the main force contract of NR07 fell by 40 or 0.49% and closed at 8,285. The quoted price for Qingdao rubber retreated slightly 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.

Tire China Net: On May 13, the American Iron and Steel Workers Federation submitted an application to the US Department of Commerce and the US International Trade Commission to initiate an anti-dumping investigation on passenger car and light truck tire products from South Korea, Thailand and Taiwan and to initiate anti-dumping and countervailing investigations on the products under investigation from Vietnam. The tire products under investigation may include tires with and without inner tubes, radial or non-radial tires, and the sales market may be the OEM market (original vehicle market) or a replacement market.

Today, Cambodia continues the holiday of the King’s birthday and the local market is closed. According to the latest data released by SCI99, the domestic all-steel operating rate is 62.8%, up 17.3% week-on-week and down 16.6% year-on-year; domestic semi-steel operating rate is 61.2%, up 116.1% week-on-week and down 14.6% year-on-year. The resumption of the production line after the holiday made the tire operating rate return to the level of mid-April. Affected by the U.S. launch of the anti-dumping investigation, the stock price of companies such as Linglong Tires who have already set up factories in Vietnam and Thailand dropped a lot.

Futures Operation Advice: The SHFE rubber rebounded at close like the trend of cotton. As for the main RU09 contract, it is advised to long a slight position and set a stop at the recent low level at 10,080.

(For reference only)