Crude oil

Saudi Arabia will cancel the voluntary production cut of 1 million barrels per day from July. We expect the UAE and Kuwait to keep pace with Saudi Arabia. Considering the recent resumption of production in Libya, we expect OPEC output in July to increase by 1 to 1.5 million barrels per day from June, The high probability of June will be the low point of OPEC production. Judging from the current operations in Saudi Arabia, on the one hand, the price of OSP has been greatly increased, on the other hand, it has also increased production. We think this reflects that the current oil-producing countries are still facing greater financial pressure. The sharp fall in oil prices has led to a continuous decline in Saudi foreign exchange reserves. In addition, Saudi Arabia’s increase in production also reflects its determination to maintain market share, especially in the Asia-Pacific market. Judging from the willingness to bid, the 40 dollars per barrel seems to be the range that Saudi Arabia believes is more appropriate. It can alleviate its own financial pressure but it will not allow US shale oil and other competitors to resume production too quickly. We think it is more difficult for oil prices to continue climbing in the near future. In terms of operation, it is advised to maintain neutral strategy.

Iron Ore

The position on I2009 contract decreased by 37,807 lots and closed at ¥773 per ton, the position on I2101 contract increased by 7,494 lots and closed at ¥699.5 per ton.

【Important Information】

1. Mysteel China iron ore arrival statistics: The total arrivals of 45 ports in the country reached 23.755 million tons, an increase of 536,000 tons; the total arrivals of the six ports in the north were 12.879 million tons, an increase of 349,000 tons. The total of 26 ports across the country reached 22.398 million tons, an increase of 519 thousand tons from the previous month.
2. According to the data of the Federation of Passenger Cars, the sales volume of general passenger cars in May was 1.639 million, a year-on-year increase of 1.9%. Chinese car sales rose for the first time in 11 months. In the January-May period of 2020, the cumulative retail market of the national passenger car market was 6.051 million units, with a year-on-year decrease of 26.0%. The cumulative sales volume this year decreased by 2.16 million units, accounting for about 10 percentage points of the total retail volume last year, mainly due to the early Spring Festival Factors and epidemic factors.
3. The latest data released by the China Construction Machinery Association on June 8 showed that in May at the end of the traditional peak season, excavator sales still maintained a good momentum, with sales of 31,700 units, a year-on-year growth rate of 68%.

4. In terms of spot, the PB powder in Rizhao Port is ¥800 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥850 per ton.

【Trading Strategy】

1. Arbitrage: Last week, shipments from 19 ports of Australia and Brazil increased by approximately 5 million tons. Australia increased by 3.5 million tons. And shipping reached a new high during the year. Brazil increased by approximately 1.5 million tons, and from the same period last year, the shipment impulse and supply in Australia are expected to increase significantly in June. However, the suspension of Itabira in Vale has an impact on supply, and the timing of the resumption of production in the mining area and whether the epidemic in Brazil will cause other impacts are more uncertain. It is recommended to wait and see for the time being.
2. The timing of shutdown of Vale mining area is difficult to determine, and the current high level is volatile. It is recommended to wait and see and maintain the option strategy. (For reference only)

PTA

The polyester production and sales went strong again, and downstream factories stocked and purchased again

Prospects of the balance sheet: follow-up maintenance expectations and large swings in production, two separate hypothesis estimates. (1) The overhaul of Yisheng is not fulfilled. Hengli put into production in July-August, only a small accumulation in June-July, and a rapid accumulation in August. (2) Yisheng and Tongkun were overhauled in July-August, Hengli put into production in July-August, accumulated in June, removed warehouse in July, and accumulated in August. At present, the profit of PTA processing is relatively high, and it pays attention to the status of the overhaul of major factories. 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 June and July; for basis trading and strategy across period, under the background of high PTA processing profits, the maintenance and cashing may be small. The June-July period tends to accumulate warehouse slightly, and the inter-period tends to be weak; after the subsequent PTA processing profits are depressed, the probability of maintenance and cashing increases, then tend to remove warehouse in July. At that time, the inter-period rebound will bottom out. It is advised to focus on the risks of the possibility of maintenance under the high production concentration of the PTA plant; the downstream restock space and the demand recovery rate of the external market.

Natural Rubber

Overseas rubber went strong. The main force contract of TF09 rose by 1.8 or 1.47% and closed at 124.6. The main force contract of JRU10 rose by 4.5 or 2.82% and closed at 164.0. The SHFE rubber retreated slightly. The main force contract of RU09 rose by 35 or 0.33% and closed at 10,635. and the main force contract of NR09 rose by 40 or 0.44% and closed at 9,070.
The quoted price for Qingdao rubber in USD rose by $5-10 per ton with few offers. The quoted price of RSS3 was $1,400 to $1,420 per ton. The spot price or CIF of STR20 was $1,250 to $1,260 per ton. The CIF of SMR20 in August was $1,260 per ton. The CIF of mixed rubber from Thailand in October was $1,300 per ton.

Tyre World News: Recently, Goodyear submitted market expectations to the US Securities and Exchange Commission. In the second quarter, the company's tire sales fell by about -50% to about 25 million. Earnings are expected to decline by about -150 million US dollars, and operating income for the same period last year was 21,900 US dollars. It is understood that affected by the epidemic, the company was forced to close a large number of factories in the first quarter. Goodyear believes that the second quarter of 2020 is the lowest valley of the tire sales business.

The recent rainfall in Thailand is acceptable. Heavy rains have been observed in Krabi Province. The average daily rainfall throughout the territory is 11.29mm, which is higher than the historical average of 6.81mm over the same period. As of May, domestic imports have shrunk, with a total of 441,000 tons of natural rubber and synthetic rubber, a year-on-year decrease of -13% and a cumulative decrease of -1.4%.

Futures Operation Advice: The SHFE rubber over the evening session plunged with chemicals. The main RU09 contract is running strongly, it is advised to pay attention to the possibility of short-term callbacks. (For reference only)