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Daily Market Review on Specified Futures Products 2020.06.05

submitted 2020-06-05 10:29:50

Crude oil

The time of the OPEC production reduction meeting is still not fully determined. At present, the attitudes of Saudi Arabia and Russia are more clear. The premise of prolonging production cuts must be that no country cheats. The current implementation rate of production cuts in Iraq and Nigeria is clearly less than 100%. It is more critical to fulfill the commitment to reduce production. Iraq’s statement today states that it is facing some technical problems in reducing production, reflecting that Iraq’s willingness to reduce production is low, and it is more forced to reduce production. In recent years, Iraq is also a big cheat in the OPEC production reduction process. The recent discrepancies within OPEC have increased the uncertainty of extending the production cut agreement, but we still believe that even if the production cuts are extended, the time will be around a month, and OPEC will still seek production recovery in the future. In terms of operation, it is advised to maintain the neutral strategy.

Iron Ore

The position on I2009 contract decreased by 9,548 lots and closed at ¥745.5 per ton, the position on I2101 contract increased by 1,519 lots and closed at ¥678 per ton.

Important Information

1. Japan Automobile Import Association announced on May 4 that new car sales of foreign manufacturers in May decreased by 46.4% year-on-year to 12,522. After a decrease of 36.9% in April, it recorded the largest decline since the current statistics began in 1988 for two consecutive months. Affected by COVID-19, it is impossible to actively carry out business activities, and people avoid going out to cause a drop in passenger flow.
2. In late May 2020, the key statistics of steel companies produced a total of 23.0176 million tons of crude steel, 20.416 million tons of pig iron, 22.7257 million tons of steel, and 3.5387 million tons of coke. The average daily output for the current ten months was 2.0925 million tons of crude steel, an increase of 0.58% month-on-month and an increase of 4.39% year-on-year; pig iron was 1.855 million tons, a decrease of 0.70% month-on-month and an increase of 5.36% year-on-year.
3. The National Development and Reform Commission agreed that China National Railway Group issued 210 billion yuan of China Railway Construction Bonds. The 70 billion yuan raised was used for railway construction projects and 140 billion yuan was used for debt structure adjustment.

4. In terms of spot, the PB powder in Rizhao Port is ¥760 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥806 per ton.

1. Arbitrage: This week, the port stocks decreased by 310,000 tons, the sparse port volume reached a high of 3.14 million tons, and the output of pig iron increased by 14,000 tons. At present, the supply and demand structure are still difficult to weaken. In the past two weeks, the growth rate of pig iron has slowed down. At present, the output of pig iron is high, and the demand for long-process raw materials is still well. From the seasonality of supply, iron ore has rebounded in August and September. In terms of coke, under the situation of production limit in Shandong and capacity reduction in Xuzhou, the supply is expected to tighten continuously. It is recommended to long the 2101 contract of coke and short the 2101 contract of iron ore with low position. The risk is that Brazil's shipment continues to be lower than expected in the later stage of delivery, and Xuzhou decoking capacity is not as expected.

2. The upward drive of iron ore has weakened, and the it is volatile at the high level. It is recommended to wait and see and maintain the option strategy. (For reference only)

PTA

The pace of stocking slows down, polyester production and sales 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 went down. The main force contract of TF09 fell by 1.1 or 0.92% and closed at 118.7. The main force contract of JRU10 fell by 2.6 or 1.66% and closed at 154.4. The SHFE rubber went strong. The main force contract of RU09 rose by 185 or 1.80% and closed at 10,475. and the main force contract of NR09 rose by 190 or 2.18% and closed at 8,910.

The quoted price for Qingdao rubber in USD retreated slightly by $5 per ton with few inquiries. The quoted price of RSS3 was$1,390 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$1,250 per ton.

CRIA News: Recently, the Rubber Board of India said that the recovery of the Indian rubber industry will depend entirely on the economic situation in the next three quarters. K.N. Raghavan, director of the Indian Rubber Authority, said that the current market situation is uncertain and the consumption of natural rubber has decreased significantly. The rubber price and market rebound depend on the speed of economic recovery. The total demand for natural rubber from Indian domestic tire manufacturers this fiscal year is expected to be 900,000 tons, down from 1.14 million tons in the previous fiscal year.

As of May, the overall operating rate of domestic tire production lines fell by 22.3% compared with the same period last year. At the beginning of June, Zhuo Chuang's statistics of domestic all-steel and semi-steel production lines started working flat on a weekly basis. Among them: all-steel operating rate is 66.0%, weekly (relatively) production is reduced by 0.3%, year-on-year (relative) production is reduced by 6.0%; semi-steel operating rate is 60.9%, weekly (relative) production is reduced by 0.2%, year-on-year (relative) production cut by 10.7%. If the start of construction is maintained in June, the overall operating rate is expected to decline by 12.2% from the same period last year, and the year-on-year reduction in output will be narrower than in May.

Futures Operation Advice: The SHFE rubber over evening session went strong with the agricultural commodities. The main force contract of RU09 contract ran to a high in the upward range. It is advised to stop profit partially with long position. (For reference only)