Crude oil

The EIA released weekly data yesterday. The overall crude oil inventory performance is similar to the API, but the current focus is still the refinery and refined oil inventories, especially distillate oil inventories that continue to increase. In the current situation, although the terminal demand is gradually recovery, but only when refined oil inventories fall to a certain level before they can increase the operating rate. Refining profit margins and high refined oil inventories are the two big problems. The current operating rate of US refineries is maintained at about 70%. This is also the main reason why the current recovery of refinery operations is slower than the recovery of refined oil consumption. From the perspective of global refineries, in addition to the recovery of Chinese refineries, other Asia-Pacific refineries are expected to gradually resume operating rates in the third quarter, but the pace of refinery recovery in Europe and the United States will be later than that in Asia Pacific.

Iron Ore

The position on I2009 contract increased by 32,190 lots and closed at ¥720 per ton, the position on I2101 contract increased by 2,584 lots and closed at ¥654 per ton.

【Important Information】

1. Chinese Premier Li Keqiang said that the new-added local government bonds was 1.60 trillion yuan, plus some national debt, the scale reaches 2 trillion yuan. Projects involving national economy and people's livelihood are the main investment.

2. According to China Construction Machinery Association statistics, in April 2020, the 25 excavator manufacturers included in the association's statistics sold a total of 45,400 excavators. Earlier, data from the China Construction Machinery Association showed that the total sales of excavators in March were 49,400 units, an increase of 11.59% year-on-year, setting a monthly historical high.

3. After suspending reverse repo operations for 37 consecutive working days, the central bank restarted reverse repo operations on May 26, not only for three consecutive days of operation, but also increased volume. According to the announcement of the central bank's open market business transactions, from May 26 to May 28, the central bank carried out 7-day reverse repo of 10 billion yuan, 120 billion yuan and 240 billion yuan respectively.

4. In terms of spot, the PB powder in Rizhao Port is ¥725 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥774 per ton.

【Trading Strategy】

1. Arbitrage: This week, the port inventories are 1.41 million tons, the evacuation volume from port are 3.0194 million tons. The recovery of pig iron output has been smaller. The port inventories continue to decline slightly, but the pressure on the port has increased significantly. The overall inventory changes have not been obvious. The shipments in Brazil has recently rebounded. The shipments of vale from January to April has decreased significantly year-on-year. It is expected that it will be more difficult to ship more than last year under the epidemic. The supply side is still expected to be tight. The current demand for pig iron on the demand side is high, but this week the demand of construction materials declined significantly. It is advised to observe whether it is beyond seasonal. It is recommended to continue to maintain the iron ore 9-1 cash and carry arbitrage strategy. If the Brazilian shipment continues to remain at around 700 in the later period, it is necessary to pay attention to the risk of accumulation, and pay attention to the recent improvement in shipments in India and South Africa.

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

The basis of PTA went strong slightly.

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 went down slightly. The main force contract of TF09 fell by 0.4 or 0.34% and closed at 117.0. The main force contract of JRU10 was flat with the previous trading day and closed at 151.8. The SHFE rubber retreated. The main force contract of RU09 fell by 50 or 0.49% and closed at 10,220. and the main force contract of NR07 rose by 30 or 0.35% and closed at 8,485. The quoted price for Qingdao rubber rose by $5 to $15 per ton with general inquiries. The quoted price of RSS3 was $1,400 per ton. The spot price or CIF of STR20 was $1,180 to $1,200 per ton. The CIF of SMR20 in August was $1,200 per ton. The CIF of mixed rubber from Thailand in October was $1,240 per ton.

Autohome News: China Banking and Insurance Information Technology Management Co., LTD. reported that the average premium of new energy vehicles is 21% higher than that of fuel vehicles. With the continued growth of ownership, exclusive insurance has become an urgent need for new energy vehicle owners. The relevant person in charge of the China Banking and Insurance Regulatory Commission said: "The terms of the new energy vehicle have been initially consulted by the industry and relevant experts, and the next step will continue to be revised and improved, and strive to launch new energy vehicle insurance exclusive demonstration products as soon as possible. The person in charge pointed out: Premium income was 818.9 billion yuan, accounting for 63% of the total insurance premiums in the property and casualty insurance industry. The number of new energy vehicle vehicles underwritten nationwide was 3.47 million, accounting for only 1.4% of the total number of insured vehicles. Due to the small size, new energy vehicle insurance has been applied as the standard in fuel vehicles in the past, which is obviously not reasonable.

In terms of latex, after the domestic cut was postponed, overseas production started the seasonal increase, and the increase in supply is expected to make real purchases cautious. According to the latest data released by Zhuochuang, the domestic all-steel operating rate is 66.2%, up 1.3% week-on-week and down 12.3% year-on-year; semi-steel operating rate is 61.0%, down 3.5% week-on-week and 15.6% year-on-year. The resuming production of the semi-steel production line is still repeated.

Futures Operation Advice: The SHFE rubber was relatively weak over evening session. It is advised to pay attention to the pressure at the high level this week.

(For reference only)