Crude oil

OPEC's production cuts have been setbacks. Since countries such as Iraq and Nigeria have failed to implement complete production cuts, the meeting scheduled on the 4th has been postponed. At present, Saudi Arabia and Russia have very strong requirements for other countries to implement 100% production cuts. In the case that these countries did not honor the reduction in production or stated that they would compensate for the reduction in production in the future, Tsarist Russia is unwilling to continue to extend production cuts. At present, Gulf OPEC has indicated that it will cut 1.2 million barrels per day of voluntary production cuts from July. We believe that as demand recovers, OPEC pursues a higher market share, and production reduction and relaxation are high probability events. At present, it is only a matter of time. The future market focus will be on whether the supply return can match the recovery of demand. In terms of operation, it is advised to maintain the neutral strategy.

Iron Ore

The position on I2009 contract decreased by 3734 lots and closed at ¥752 per ton, the position on I2101 contract decreased by 1376 lots and closed at ¥682 per ton.

【Important Information】

1. According to the China Federation of Trade Unions, the retail sales of the main manufacturers in the whole month of May reached an average of 49,000 vehicles per day, with a year-on-year growth rate of 0%. The overall month of May increased by 12% compared with April, and the growth was stronger.

2. According to China Steel Association data, in late May, the social stocks of five major steel products in 20 cities were 13.12 million tons, a decrease of 910,000 tons from the previous period, a decrease of 6.5%, and a downward trend for the eighth consecutive period. Reduced by 7.09 million tons from the peak in early March, down 35.1%; increased by 6.3 million tons from the beginning of the year, up 92.4%.

3. Vietnamese steel producer Hòa Phát signed a contract to sell 120,000 tons of billet to the Chinese company Hangzhou CIEC Group, valued at more than 1 trillion VND (approximately USD43 million). This is the largest order ever received by Hòa Phát, a state-owned steel plant in Vietnam. The order will be delivered in batches between July and the end of August.

4. In terms of spot, the PB powder in Rizhao Port is ¥770 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥822 per ton.

【Trading Strategy】

1. Arbitrage: According to the data released by zhaogang.com, the output of construction materials is still slightly increasing, the inventory decline is expanding, and the table needs to rebound. Last week, southern China was greatly affected by heavy rains. As the output of construction materials continues to rise, the construction materials are expected to rise in the off-season. Judging from the rebound in August and September, it is recommended that you can try more than 01 coke ore, that is, 01 coke more than 01 iron ore. The risk is that Brazil's shipment continues to be lower than expected in the later period.

2. The upward drive of iron ore has weakened, and the current high level is volatile. It is recommended that the option strategy be maintained temporarily.

PTA

The downstream market restarted the replenishment, the production and sales volume of polyester increased sharply.

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 strong. The main force contract of TF09 rose by 1.9 or 1.61% and closed at 119.8. The main force contract of JRU10 fell by 0.2 or 0.13% and closed at 153.8. The SHFE rubber fluctuated and was relatively strong. The main force contract of RU09 fell by 85 or 0.81% and closed at 10,345. and the main force contract of NR09 fell by 20 or 0.23% and closed at 8,815. The quoted price for Qingdao rubber rose by $10 to $15 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 $1,210 to $1,220 per ton. The CIF of SMR20 in August was $1,225 per ton. The CIF of mixed rubber from Thailand in October was $1,260 per ton.

China News: On June 2, according to the data released by the cvworld.com, in May, the domestic heavy truck market is expected to sell about 175,000 vehicles of various types, down 8.5% from the previous month and up 62% from the same period last year. From January to May this year, the cumulative sales of the heavy truck market exceeded 640,000 units, a cumulative increase of 16% year-on-year. Cvworld.com pointed out that the policy of early elimination of diesel trucks with emissions of "National Three" standard and below greatly promoted the growth of domestic heavy truck market demand after the epidemic.

As of May, the latest El Nino 3.4 index closed at +0.3°C, weakening month-on-month and entering the normal range. The domestic climate is normal, the supply of basic raw materials in Yunnan Banna area is gradually increased, and the processing plant operation rate has steadily increased. At that time, the purchase price of latex was ¥9,400 to ¥10,000 per ton, a premium of ¥200 to ¥600 per ton in terms of the cup lump.

Futures Operation Advice: The SHFE rubber fluctuated and went weak over evening session. As for the main RU09 contract, it is advised to pay attention to the pressure at the recent high level.

(For reference only)