Crude oil

Judging from the latest fund holdings data, the net long positions of U.S. Oil Funds are still at record highs. After the recent price reached a new high, the fund’s enthusiasm for long positions has not diminished. The long positions have been very crowded, while the positions of Brent oil funds are relatively rational. The range of the fund is limited, and the split of the fund's net long positions reflects that the reduction in production in the United States and Canada has a great impact on the net flow of Cushing's pipeline. The main driver of the recent rebound is supply, but the core contradiction in the oil market is that refinery profits are still too weak, which makes crude oil prices difficult to transmit to downstream refined oil. Buyers in some regions are worried about future supply to further tighten recent panic purchases putting some demand ahead, we believe that the future rebound of the oil market will still need to see the continued recovery of demand, especially to see the European and American refineries re-enter the replenishment stage, but at present, we still have not seen relevant signs. In terms of operation, it is advised to maintain the neutral strategy, and wait and see temporarily.

Iron Ore

The position on I2009 contract decreased by 24,064 lots and closed at ¥712.5 per ton, The position on I2101 contract increased by 3,607 lots and closed at ¥641.5 per ton.

【Important Information】

1. The total arrival volume of 45 ports across the country was 22.073 million tons, a decrease of 585,000 tons from the previous month; the total arrival volume of the six ports in the north was 11.64 million tons, an increase of 1.296 million tons from the previous month. The total arrival volume of 26 ports across the country reached 21.057 million tons, a decrease of 337,000 tons from the previous month.

2. According to data released by the General Administration of Customs, in April 2020, China exported 4.07 million tons of steel sheet products, an increase of 5.1% year-on-year; from January to April, it exported 12.91 million tons, a decrease of 8.2% year-on-year.

3. From January to April, the total profits of state-owned and state-holding enterprises across the country reached 412.01 billion yuan, a year-on-year decrease of 63%, and the decline was further expanded from the decline of 59.7% from January to March. Among them, the profit of central enterprises was 362.8 billion yuan, down 53.1% year-on-year; local state-owned enterprises were 49.21 billion yuan, down 85.5% year-on-year.

4. In terms of spot, the PB powder in Rizhao Port is ¥730 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥772 per ton.

【Trading strategy】

1. Arbitrage: The total shipments of Australia and Brazil this week increased by 3.8 million tons week-on-week, and the Brazilian shipments increased significantly this week, which have returned to the same level last year. The overall supply pressure is limited. The high output of pig iron supports the demand for iron ore, and it is advised to maintain the 9-1 cash and carry arbitrage strategy. In terms of the risk, if the Brazilian shipment continues to remain at around 700 in the later period, it is necessary to consider the risk of inventory accumulation; at present, iron ore and coke are strong, the profit of hot rolled coil is low, and the demand is not up to the same period last year. The raw material squeezes the profit of the hot rolled coil, which may lead to an increase in the overhaul of the hot rolled coil plants later.

2. It is recommended to buy the iron ore seagull options on 09 contract when the market retreats, that is, buy I2009-C-690, sell I2009-C-750, and sell I2009-P-650.

PTA

Polyester production and sales continue to slow down, and upstream factories also wait and see not to continue to repurchase.

The estimated balance sheet in June and July 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 rose slightly at bottom. The main force contract of TF09 fell by 0.1 or 0.09% and closed at 114.8. The main force contract of JRU10 fell by 1.0 or 0.65% and closed at 151.9. The SHFE rubber fluctuated weakly. The main force contract of RU09 was flat with the previous trading day and closed at 10,240. and the main force contract of NR07 fell by 10 or 0.12% and closed at 8,365. The quoted price for Qingdao rubber rose by $10 or 0.12% per ton with general inquiries. The quoted price of RSS3 was $1,400 per ton. The spot price or CIF of STR20 was $1,175 to $1,190 per ton. The CIF of SMR20 in August was $1,200 to $1,250 per ton. The CIF of mixed rubber from Thailand in October was $1,230 per ton.

Rubber Technology Network: The latest statistics from the National Bureau of Statistics show that in April, synthetic rubber output was 590 thousand tons, an increase of 2.3% year-on-year; the cumulative output from January to April was 2.067 million tons, a year-on-year decrease of 5.1%. Since May, the domestic styrene butadiene rubber plant has gradually resumed operation, and the Yibang styrene butadiene rubber plant is scheduled to resume operation; Sinopec, PetroChina and other enterprises are operating stably, while Wanda and Chuanhua and other enterprises plan to resume production; The Nantex nitrile rubber plant in Zhenjiang with annual output of 10,000 tons per year, the IGSR nitrile rubber plant with annual output of 30,000 tons per year and other nitrile plants are operating normally; overall, the domestic output of synthetic rubber will increase in May to more than 600,000 tons.

Today, Malaysia continues the Festival of Fast-breaking, the local market is closed, and Southeast Asia's main producing countries are gradually increasing their seasonal production. Thailand's full-month rainfall in May is not as good as the previous month. The average daily rainfall is 3.75mm, down month-on-month and year-on-year. In terms of consumption, all-steel export orders have increased, domestic sales have slowed, and overall inventories are under pressure.

Futures Operation Advice: The SHFE rubber fluctuated slightly like the trend of cotton. The main RU07 contract is likely to fluctuate and go strong, and it is advised to pay attention to the support at the recent low level.

(For reference only)