Crude oil

The EIA released inventory data yesterday, which is basically consistent with API data. National inventories have declined, and Cushing’s inventory has fallen sharply. This is basically consistent with our previous judgment. It is affected by the sharp reductions in production in Canada, North Dakota Bakken, and the Permian Basin. Xin's pipeline net inflow fell sharply, causing Cushing to peak and fall. Before the expiration of this June contract, there has even been a structure of recent months of premiums. However, the current price of WTI in Cushing is too strong, which has caused the regional arbitrage window of Cushing and Midland to Gulf is closed, and the arbitrage window of crude oil export from the US Gulf is also closed. The Saudi crude oil purchased from the early stage of the Gulf refinery will arrive in large quantities from May to June. No matter whether the demand for domestic crude oil in the US refineries or the export of US crude oil will be affected by the strength of US oil prices, the recent spreads of oil types to WTI in Cushing are relatively weak, showing that Cushing oil is strong and other areas are weak, we believe that as Canada and shale oil supply bottomed out in the third quarter, the current market structure will be repaired. In terms of operation, it is advised to maintain the neutral strategy, and wait and see temporarily.

Iron Ore

The I2009 contract oscillated and closed at 704.5 over evening session, while the position on I2101 contract increased by 8,337 lots and closed at 640.5.

1. Volume: On May 20, the cumulative volume of the iron ore in the main port all over the country was 1.405 million tons, down 34.4% month-on-month; the average daily transaction this week was 1.676 million tons, up 21.7% week-on-week; the average daily transaction this month was 1.429 million tons, down 4.8% month-on-month.

2. According to news from the website of the General Administration of Customs, the current implementation of the sampling quality inspection of imported iron ore batch by customs is adjusted to the application of the enterprise; if necessary, the customs will carry out supervision and inspection and monitoring of the content of toxic and harmful elements.

3. In terms of spot, the spot price of PB powder in Qingdao Port is ¥723 per ton, and golden bubba price in Rizhao Port is equivalent to about ¥762 per ton.

Arbitrage: Brazil’s shipments are still at a low level. The epidemic in Brazil is severe, and there is a big uncertainty as to whether the later shipments will be as expected in the annual report. The supply may be lower than expected. At present, the demand for building materials is expected to be better in real estate and infrastructure, and the recent demand for hot rolled coils is also improving. The production of pig iron is expected to have a slight room for improvement. The accumulation in the third quarter may be lower than expected. As the inventory-to-sales ratio is low, it is recommended to maintain a 9-1 cash and carry arbitrage strategy. (For reference only)

PTA

The upstream purchase drives the basis of PTA to rise, and the production and sales of polyester increase again. 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, it is estimated that the accumulated inventory of PTA will continue in May and June, and its performance will be weak; for basis trading and strategy across period, it is advised to focus on the basis adjustment ability of mainstream factories in the short term, which may provide good opportunity for reverse cash and carry arbitrage. 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 went up. The main force contract of TF09 rose by 1.4 or 1.11% and closed at 118.5. The main force contract of JRU10 rose by 0.5 or 0.32% and closed at 155.4. The SHFE rubber retreated slightly. The main force contract of RU09 rose by 5 or 0.05% and closed at 10,425. and the main force contract of NR07 fell by 45 or 0.52% and closed at 8,535. The quoted price for Qingdao rubber rose by $10 to $20 per ton with acceptable inquiries. The quoted price of RSS3 was $1,400 to $1,410 per ton. The spot price or CIF of STR20 was $1,190 to $1,200 per ton. The CIF of SMR20 in September was $1,210 per ton. The CIF of mixed rubber from Thailand in September was $1,230 to $1,235 per ton.

Gasgoo News: April is the first full month of the European epidemic blockade, and the demand for new cars has recorded the largest monthly decline since record (1990). According to data released by the ACEA, in April this year, new car sales in the European passenger car market plummeted by 78.3% year-on-year, from 1.345 million in the same period in 2019 to 292,000.

Today is the Ascension Day in Indonesia and the local market is closed. As of March, Indonesia exported 636,800 tons of rubber, an increase of 4.46% year-on-year. As of May 10th, Japan's TOCOM delivery inventory was slightly reduced by 6 tons to 8992 tons, of which 117 tons was into the warehouse and 123 tons was out of the warehouse, and the destocking came to an end.

Futures Operation Advice: The SHFE rubber retreated at close. For the RU01 contract, it is advised to partially stop profit and pay attention to the support at the recent low level.

(For reference only)