Crude oil

Recently, the number of COVID-19 infections in Texas has raised the market's concerns about the second outbreak of the epidemic. From the VIX index, the market panic has risen again, but this time the oil price adjustment is basically within market expectations. From the trigger point of this decline, the core focus of the market has once again returned to the demand. The spread of the epidemic, refinery profits and replenishment power are currently negatively suppressing the market. The overcrowding previous U.S. oil fund net long position may also lead to trampling during the fall of oil prices. We believe that oil prices will return to the stage of shock adjustment in the near future. We believe that the background to the rise of oil prices must be the destocking of refined oil and the profit of refineries brought about by the continued recovery of demand. The current decline in oil prices is a good thing to ease the contradictions in the industrial chain, and helps to repair the huge gap between crude oil and refined oil fundamentals. In terms of operation, it is advised to be cautiously bearish and pay attention to the risks of sudden supply disruption or geopolitical events.

Iron Ore

The position on I2009 contract decreased by 16,429 lots and closed at ¥756 per ton, the position on I2101 contract increased by 1,814 lots and closed at ¥679 per ton.

【Important Information】

1. According to market sources, due to the lack of semi-finished raw materials and orders, Italian longs producer JSWSteel Italy (former Aferpi plant) will be forced to stop its wire and SBQ production. Due to shortage of billets and insufficient orders, the wire rod mill may be discontinued in June. For some time, JSW Steel Italy has been facing the problem of purchasing semi-finished products.

2. The National Railway's fixed asset investment plan for 2020 will be increased again. After China Railway Guangzhou Bureau Group Co., Ltd. increased its fixed asset investment plan target in April, it has recently re-invested another 2.4 billion yuan, reaching 79.518 billion yuan. "China Business News" received the above news from China National Railway Group Co., Ltd. on June 10.

3. In terms of spot, the PB powder in Rizhao Port is ¥780 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥839 per ton.

【Trading Strategy】

1. Arbitrage: This week, iron ore port inventory decreased by 560,000 tons, but there was a significant increase in port pressure, and number of ships increased by 9, and there was a slight accumulation in total. Due to the closure of Tangshan Port, the port congestion volume dropped significantly. The recent changes in the total inventory of iron ore are relatively small. In June, the shipment impulse of Australia may have accumulated in the later stage, and the seasonal demand for superimposed building materials may weaken. The short-term iron ore may be adjusted. It is advised to reduce the positions on 9-1 cash and carry arbitrage strategy.

2. With the high shipment volume in Australia and seasonally weak market of construction material, the upward pressure is large. It is recommended to sell the I2101-C-720 option.

PTA

The production and sales of polyester continues the weak trend.

Due to large uncertainty of the maintenance and production expectation, two hypothesis prediction of balance tables are as follows: (1) Yisheng maintenance will not be fulfilled. Hengli put into production in July to August, only a small accumulation may appear in June and July, and a rapid accumulation will appear in August. (2) Yisheng and Tongkun will be overhauled in July to August, Hengli will put into production in July to August, and accumulation appears in June, and moderate destocking appears in July, and a slight accumulation will appear in August. At present, the processing profit of PTA is relatively high, and it is necessary to pay 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 slight destocking of PTA may appear in June and July, and the strategy across varieties may turn strong relatively; for basis trading and strategy across period, with relatively high processing profits of TA, the overhaul is expected to be less, and the slight destocking may appear, while the high inventory level will still suppress the strategy across period; when the processing profits of TA declines, the possibility of overhaul will increase and the destocking is expected to appear in July, and then the strategy across period is likely to rebound. 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 active maintenance control at TA plant's high production concentration, the downstream restock space and the recovery rate of overseas demand.

Natural Rubber

Overseas rubber went down weakly. The main force contract of TF09 fell by 1.2 or 0.97% and closed at 122.1. The main force contract of JRU11 fell by 1.0 or 0.62% and closed at 159.0. The SHFE rubber fluctuated. The main force contract of RU09 fell by 145 or 1.38% and closed at 10,400. and the main force contract of NR09 fell by 125 or 1.40% and closed at 8,815. The quoted price for Qingdao rubber in USD fell by $5 per ton with general inquiries. The quoted price of RSS3 was $1,400 to $1,420 per ton. The spot price or CIF of STR20 was $1,240 to $1,250 per ton. The CIF of SMR20 in August was $1,270 per ton. The CIF of mixed rubber from Thailand in October was $1,290 to $1,295 per ton.

China Association of Automobile Manufacturers: In May, the domestic automobile production was 2.187 million units, an increase of 18.2% year-on-year; automobile sales were 2.194 million units, an increase of 14.5% year-on-year. Among them, the output of new energy vehicles was 84,000, a year-on-year decrease of 25.8%. After the epidemic, the domestic auto market has rebounded significantly.

Rainfall in Thailand was moderate in early June. Moderate to heavy rains were only observed in Rayong and Surat Thani. The average daily rainfall was 9.32 mm, which was higher than the historical average of 6.80 mm over the same period. According to the latest data released by Zhuochuang, the domestic all-steel operating rate is 56.5%, down 14.4% week-on-week and 25.5% year-on-year. Due to external factors, the production line in Shandong Dongying area has a temporary suspension of production, which has dragged down the already low operating rate, but the pressure on finished product inventory has been eased.

Futures Operation Advice: The SHFE rubber went down with commodities, and may continue to fluctuate weakly due to the falling oil price.

(For reference only)