Crude oil

At present, the market pays more attention to the continuity of China's inventory replenishment, which is a big question. We think there are three reasons that will restrict Chinese buying. The first is that the situation of this round of restocking is similar to the panic replenishment of stocks on the eve of the US sanctions against Iran in October 2018. The main reason is that the market is worried about the future supply tightening, but from the future situation, according to the OPEC production reduction agreement, production will be reduced after June. The range will gradually relax, and the recovery of production in the Middle East and Russia will be a high probability event. In addition, China's round of replenishment will put demand ahead, resulting in weak buying momentum. The second is that the high operating rate of domestic refineries is difficult to sustain. At present, the operating rate of domestic refineries has reached record highs, especially the local operating rate of local refineries has been approaching the historical high of 80%. However, due to the weak external demand caused by the overseas epidemic, the main business began to significantly reduce refined oil exports. It is reported that Sinopec will cut half of its refined oil exports from May, and other main units also reduce their export plans. It is expected that high-level domestic refineries will increase their exports under the circumstances, the contradiction between supply and demand of domestic refined oil will become more prominent. The third is the domestic storage capacity restrictions. Although a batch of new crude oil tanks are currently being built in China, such as Shandong, etc., in the next one to two months, in the case of a large number of domestic crude oil shipments arriving at the port, it is expected that both the port and storage will be Faced with greater pressure, the number of crude oil warehouse receipts of INE has also reached new highs, and the bonded storage capacity has also tightened.

To sum up, China's current replenishment capacity is staged, mainly concerned about the shortage of medium and heavy crude oil in the future and the future rise in oil prices. Under the current domestic crude oil storage capacity restrictions and the growth of refined oil demand, the purchase force is unsustainable, and the global refinery operations outside of China are still slowly recovering. Due to the strong discount of crude oil and weak refining profits, refineries have relatively weak incentives to purchase crude oil, and may even resell the crude oil purchased previously. In terms of operation, it is advised to maintain the neutral strategy, and wait and see temporarily.

PTA

Upstream factories postponed repurchase, polyester production and sales also slightly slowed down.

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 slumped. The main force contract of TF09 fell by 2.0 or 1.68% and closed at 116.9. The main force contract of JRU10 rose by 0.7 or 0.46% and closed at 152.2. The SHFE rubber retreated slightly. The main force contract of RU09 rose by 30 or 0.29% and closed at 10,2220. and the main force contract of NR07 rose by 60 or 0.72% and closed at 8,300. The quoted price for Qingdao rubber fell by $5 to $10 per ton with general inquiries. The quoted price of RSS3 was $1,390 to $1,400 per ton. The spot price or CIF of STR20 was $1,165 to $1,170 per ton. The CIF of SMR20 in August was $1,200 per ton. The CIF of mixed rubber from Thailand in October was $1,230 per ton.

Rubber Valley News: Affected by comprehensive factors including the epidemic, tire production as one of the most important parts of the automobile has not escaped the decline. The domestic production of rubber tire casings in April was 66.612 million, a year-on-year decline of 12.2%; The cumulative output in April was 218.07 million, down 17.4% year-on-year. From January to April, Shandong's overall imports and exports to ASEAN increased significantly, while imports and exports to South Korea, the United States, and Brazil declined.

Today is the Festival of Fast-breaking in Malaysia and the Philippines, the local market is closed, and the major Southeast Asian producers are gradually increasing their seasonal production. The latest warehouse receipts inventory has not changed much: the subtotal RU inventory is 239,000 tons, futures inventory is 18,000 tons less than the subtotal RU inventory, the difference increased by 5.0% week-on-week; the subtotal NR inventory is 70 thousand tons, and futures inventory is 1 thousand tons less than the subtotal NR inventory, the difference is increased slightly by 0.1% week-on-week.

Futures Operation Advice: The SHFE rubber fluctuated weakly over evening session. For the main RU09 contract, it is advised to pay attention to the support at the recent low level.

(For reference only)