Demand for refined oil: The darkest moment has passed, and it will gradually recover in the second half of the year. The high probability of global demand for the whole year has bottomed out in April, and will gradually recover in the second half of the year. In the short term, the demand for social alienation measures will quickly recover, but in the medium term, it will be constrained by the downturn in jet fuel consumption and the economic contraction. The resulting structural demand decline (the increase in the number of unemployed people, the greater impact of industries such as hotels and restaurants, the superposition of many factors such as changes in travel methods), it is expected that it will be very difficult to fully recover before the epidemic within this year. According to estimates from the May monthly reports of the three major institutions, consumption in the fourth quarter of this year is about 96% of the same period last year. The short-term global demand recovery momentum is driven by the gasoline consumption after the relaxation of isolation, but in the second half of the year, the future consumption recovery momentum will be more depending on the endogenous growth of the economy and the recovery of the aviation industry. We believe that the growth of demand in the second half of the year should not be too high. The dragging effect of the two middle distillates of coal and coal will continue in the second half of the year, and the recovery of demand will be tortuous and slow.
Refinery demand: China’s overbought is unsustainable, and global refinery profits need to be repaired urgently. We believe that China’s overbought is unsustainable because it brings two problems: one is the problem of excess domestic refined oil, even if the domestic downstream demand recovers even faster, in the context of the current local refining operation rate as fast as 80% and the export of refined oil halved month-on-month (imports of light cycle oil, blended aromatics and other oil blending materials have also increased significantly), the domestic excess of refined oil is an inevitable result. When the social stock of refined oil increases to a certain extent, it will inevitably force the load of the refinery to decline; second, China’s overbought and the Middle East’s production cuts have superimposed the global crude oil spot premium rebound, and the crude oil futures discount in recent months has also narrowed rapidly. This price difference structure on the one hand makes floating warehouse oil storage no longer economical, and even some traders have already begun to sell floating warehouses to cash profits.
Crude oil supply: The peak of production cuts is now available and will gradually recover in the future. Both OPEC and non-OPEC have experienced substantial production cuts from May to June this year. The total global production cuts have reached 14.5 million barrels per day, mainly because the OPEC+ production reduction agreement came into effect in May and has been well implemented. On the other hand, non-OPEC also experienced a significant passive production cut due to low oil prices. However, in terms of supply outlook, we believe that the low point of supply for the whole year will be in June, and that supply will also recover following demand from July.
Inventory and supply-demand balance: Both OPEC and non-OPEC have experienced substantial production cuts from May to June this year. The total global production cuts have reached 14.5 million barrels per day, mainly because the OPEC+ production reduction agreement came into effect in May and has been well implemented. On the other hand, non-OPEC also experienced a significant passive production cut due to low oil prices. However, in terms of supply outlook, we believe that the low point of supply for the whole year will be in June, and that supply will also recover following demand from July.
Crude oil price: There is a risk of callback in the short term, but the oil price operation center moves up. Neutral, we think the current oil price rebounds too fast and there is a risk of short-term pullback. In the medium term, we believe that if the inventory degassing is relatively smooth, the oil price is expected to run at the center of $30-50 per barrel. Due to the large global inventory and OPEC remaining capacity constraints, we expect that it will be more difficult to break through $50 per barrel unless there is a black swan geopolitical event.
Risk points: the second outbreak of the epidemic, the geopolitical black swan incident.
The position on I2009 contract increased by 25,125 lots and closed at ¥787.5 per ton, the position on I2101 contract decreased by 504 lots and closed at ¥699 per ton.
1. According to the statistical analysis of China Association of Automobile Manufacturers, in the first half of June, the production and sales of 11 key automobile manufacturers completed 700,000 units and 494,000 units respectively. The production and sales increased by 63.4% and 40.8% compared with the first half of May, respectively. The year-on-year growth was 86.1% and 34% respectively.
2. According to the data released recently by the American Iron and Steel Institute (AISI), in April, the total imports of American steel were 2.773 million tons, of which finished steel imports were 1.309 million tons, an increase of 58.2% and a decrease of 13.5% compared with March. In the first four months of this year, total US steel imports were 9.185 million tons, of which finished steel imports were 5.819 million tons, which decreased by 20.3% and 28.2% respectively compared with the same period in 2019.
3. In terms of spot, the PB powder in Rizhao Port is ¥790 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥839 per ton.
1. Arbitrage: Affected by the closure of Tangshan Port last week, the amount of sparse ports has decreased significantly. The iron ore port stocks have a certain increase in pressurized ports. The total inventory of iron ore has recently accumulated slightly, mainly due to the larger increase in port pressure. The shipping impulse of Australia in June may be accumulated in the later stages, and the demand for building materials is currently weakening seasonally, but the current basis is also large. It is recommended to wait and see.
2. During the short-term high shipments in Australia and off-season of building materials, the upward driving of spot is weakened, but the basis is still large, it is recommended to wait and see. (For reference only)
PTA inventory is at a high historical level, focusing on manufacturers' active or passive maintenance to regulate PTA supply
Prospects of the balance sheet: follow-up maintenance expectations and large swings in production, two separate hypothesis estimates. (1) The maintenance of Yisheng, Tongkun and Zhongtai did not materialize, and Hengli put into production in July-August. It went to the warehouse on average in June-July and quickly accumulated in August. (2) Yisheng, Tongkun and Zhongtai were overhauled in July-August, Hengli put into production in July-August, the average mid-range went to the warehouse from June-July, and accumulated slightly 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 PTA in June to July will remove a small amount of warehouse, and cross-variety will be slightly stronger; for strategy across period, under the background of high PTA processing profits, the maintenance and cashing may be small. The June-July period tends to remove warehouse slightly. However, the absolute high inventory level is still pressing across the period; after the subsequent PTA processing profits are depressed, the probability of maintenance and cashing increases, then tend to remove warehouse quickly 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.
Overseas rubber opened lower and rebounded. The main force contract of TF09 fell by 0.3 or 0.25% and closed at 121.8 The main force contract of JRU10 fell by 1.0 or 0.63% and closed at 159.0. The SHFE rubber fluctuated in a weak position. The main force contract of RU09 rose by 25 or 0.24% and closed at 10,400, and the main force contract of NR09 closed at 8,815, which was same as last day. The quoted price for Qingdao rubber in USD fell by $10-20 per ton with general inquiries. The quoted price of RSS3 was $1,400 per ton. The spot price or CIF of STR20 was $1,220 to $1,240 per ton. The CIF of SMR20 in August was $1,250 per ton. The CIF of mixed rubber from Thailand in October was $1,260 per ton.
Rubber Valley News: The COVID-19 has affected Thailand’s latex pillow exports. Prior to the 20 million latex pillow trade agreement reached by the Thai Deputy Prime Minister and Minister of Commerce Zhu Lin with foreign countries, the actual export was only 1.7 million, and the backlog was waiting in the warehouse for delivery, which were more than 18 million. The export volume of latex pillows is declining. Due to the impact of the COVID-19, the export of commodities has slowed down. In addition, consumers have a conservative attitude towards consumption, the market of importing countries has also suffered. However, it is believed that exports will improve after the COVID-19 is eliminated. Consumers will also boldly consume, especially Chinese consumers.
As of last Friday, NR stock futures maintained a value of 63,000 tons and removed -0.3 million tons from the warehouse. The latest car data is warmer. As of early June, the production and sales of 11 key automobile manufacturers increased by 63.4% and 40.8% respectively in early May; the Shanghai private car license quota announced at the weekend was 17,000, which was 7233 or 74% more than the same period last year.
Futures Operation Advice: Concerns about the rebound of the COVID-19 at home and abroad may cause the SHFE rubber to continue to operate weakly (for reference only).