FangQuant › Daily Morning

Daily Market Review on Specified Futures Products 2020.05.27

Fang submitted 2020-05-27 14:12:44

Crude oil

According to OPEC+’s previous production reduction agreement, the scale of production reduction will gradually decrease over time. May to June will be the month with the greatest output reduction. It is expected that OPEC+’ s output will start to rebound from July. A ministerial OPEC meeting will be held. It is worth paying attention to whether to adjust the scale and time of production cuts. At present, Russia frequently expresses its position on the issue of production cuts. We believe that it is mainly because of Russia’s special geological conditions. If the production cut time is too long, it will destroy the reservoirs of some oil wells, leading to a permanent loss of production, so we expect the market’s focus on supply to shift from the speed of reduction to the speed of recovery. Whether it’s OPEC+ or US shale oil, the future supply will recover with great probability, and the current shale oil recovery is slow. OPEC+ countries such as Saudi Arabia and Russia are still able to increase production rapidly. 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 4,157 lots and closed at ¥687.5 per ton, the position on I2101 contract increased by 1,154 lots and closed at ¥624 per ton.

Important Information

1. Brazilian steel mine manufacturer Usiminas released its report for the first quarter of 2020, and its mining sector performance is as follows: Usiminas' iron ore sales in the first quarter was 2.21 million tons, a decrease of 0.29 million tons (11.6%), an increase of 0.31 million tons (16.3%) from the same period last year. Among them, 27.3% of iron ore output is supplied to Usiminas' own steel mill, 65.0% of iron ore sales are exported to overseas markets, and the remaining 7.7% is sold in the Brazilian domestic market.

2. It was learned from the press conference of the Hebei delegation at the Third Session of the 13th National People's Congress that all 67 key projects implemented in 2019 started construction, of which 9 projects were basically completed. The construction of peripheral high-speed and trunk roads such as new lines was accelerated. Most of the key projects arranged this year, except for the Jingxiongshang high-speed rail (Hebei section) and Xiongxin high-speed rail (Hebei section), have entered the construction site and are intensified.

3. According to Nippon Steel's annual report for fiscal year 2019 (April 2019-March 2020), the company plans to liquidate its loss-making subsidiary Nippon EGalv Steel (N-EGALV) in Malaysia. The company made a liquidation decision in March this year. According to the plan, the factory in Penang will stop production in June and complete liquidation on July 31.

4. In terms of spot, the PB powder in Rizhao Port is ¥718 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥766 per ton.

Trading strategy

1. Arbitrage: The total shipments of Australia and Brazil this week increased significantly week-on-week, and the Brazilian shipments 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 and pay attention to the increase in shipments of 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: Under the background of the TA upstream factory not repurchasing, the basis has continued to be weak, and PX production profits continue to fall.

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 rebounded slightly. The main force contract of TF08 rose by 0.8 or 0.70% and closed at 115.7. The main force contract of JRU11 rose by 0.1 or 0.06% and closed at 154.7. The SHFE rubber fluctuated weakly. The main force contract of RU09 fell by 45 or 0.44% and closed at 10,280. and the main force contract of NR07 fell by 30 or 0.36% and closed at 8,340. The quoted price for Qingdao rubber rose by $5 to $10 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 to $1,205 per ton. The CIF of mixed rubber from Thailand in October was $1,230 per ton.

Tire China News: Recently, the "Hubei Province Provincial Key Construction Plan for 2020" was announced to the public. A total of 410 projects were arranged throughout the year, with a total investment of 13.291 trillion yuan and a planned investment of 226.3 billion yuan in 2020, including Hubei Jiashun all-steel tire project with an annual output of 3 million. The project is located in the high-tech zone of Xianning City. The total investment of the project is 2 billion yuan. This year, it is planned to invest 400 million yuan. The project was laid on November 8, 2019, and was invested and constructed by Hubei Aoles Tire Co., Ltd. The project will purchase 3 F370 mixers, 3 F270 mixers and other special equipment. The annual demand is about 76,000 tons of natural rubber, 24,700 tons of synthetic rubber, 53,300 tons of carbon black, and 28,200 tons of steel cord. It is reported that Hubei Jiashun Tire Co., Ltd. was established in July 2019 and is 100% controlled by Hubei Oles Tire. "Jiashun" is one of the main brands of all-steel tires under Oles Tire.

The domestic Yunnan area has not yet been extensively cut, and there is a shortage of local second-class cup lump, whose premium is about ¥300 per ton in terms of latex, and its price is reported to ¥9,100 to ¥9,500 per ton. The latex production in Hainan is mainly emulsion, which is reported at ¥11,500 per ton. In terms of synthetic rubber, spot transactions are general and there is a lack of confidence in the market outlook. The terminal production line still focuses on digesting pre-stocks and purchase of rigid demand.

Futures Operation Advice: The SHFE rubber fluctuated slightly like the trend of agricultural commodities. In terms of the main RU09 contract, it is advised to pay attention to the support at the recent low level.

(For reference only)

Currently no Comments.