Crude oil

The United States may impose sanctions on tanker companies that transport Venezuelan crude oil, similar to the sanctions imposed on Iran last September. Because of fears of related sanctions, tanker companies have chosen to avoid transporting Venezuelan crude oil. The production and export situation has further deteriorated. Due to the decline in the number of drilling rigs and the full storage tanks in mid-June, its output has fallen below 400,000 barrels/day. From the export data of the shipping schedule, its export volume in the first half of this year was 500,000 to 800,000 barrels per day, although the volume is not large, Venezuela is an important source of global heavy oil resources. The further shrinking of Venezuela's exports has a greater impact on the production of HSFO and asphalt.

In terms of operation, it is advised to be cautious about short strategy and hold short strategy. The risk lies in geopolitical premium return.

Iron Ore

The position on I2009 contract decreased by 16,035 lots and closed at ¥768.5 per ton, the position on I2101 contract increased by 5,252 lots and closed at ¥693.5 per ton.

【Important Information】

1. According to Vale’s official website, the company is allowed to resume iron ore mining in Itabira; Vale SA, the world’s largest iron ore producer, will resume operations of its Itabira complex after the Brazilian Labor Authority approves its revised Covid-19 agreement; the Rio de Janeiro-based company said in a statement on Wednesday that the three mines shut down on June 5 will gradually resume operations. Production affected is less than 1 million tons, and the company believes that there is no need to modify its 2020 production guidelines.

2. Japan Steel recently issued a statement saying that the company has decided to overhaul No. 3 blast furnace at Nagoya Plant, which has a volume of 4,300 cubic meters and a production capacity of 3.5 million tons per year. Nippon Steel's Nagoya Plant is one of the world's major automobile steel plate comprehensive manufacturers. The plant is mainly responsible for supplying upstream processing materials such as high-grade steel plates to other steel mills. The last major overhaul of No. 3 blast furnace was carried out 20 years ago.
3. According to data from the National Bureau of Statistics, in May 2020, China's raw iron ore output was 74.642 million tons, an increase of 8.1% year-on-year; the cumulative output from January to May was 33.767 million tons, an increase of 4.1% year-on-year.

4. 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 ¥834 per ton.

【Trading Strategy】

1. Arbitrage: The Vale Itabira mining area resumes production, and later shipments of Vale are expected to improve. In June, shipments in Australia grew rapidly in a short period of time, and there may be accumulation in stages. The demand for building materials is currently seasonally weak. The long-process profit in East China has been low, and the low profit of steel mills has also suppressed the raw materials. The upward driving of iron ore spot has weakened, but the current basis is also large. It is recommended to wait and see in short term, focus on the long opportunity on 9-1 cash and carry arbitrage strategy.

2. The short-term spot upward drive is weakened, but the basis is still large. It is recommended to wait and see. (For reference only)

PTA

Polyester production and sales are still weak, and pay attention to the expected production of Hengli new device

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 5# went to normal production in July. It went to the warehouse in June and quickly accumulated in July-August. (2) Yisheng, Tongkun and Zhongtai were overhauled in July-August, Hengli 5# went to normal production in July. It went to the warehouse in June, and accumulated again in July-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. 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 fluctuated slightly. The main force contract of TF09 rose by 0.2 or 0.17% and closed at 120.2. The main force contract of JRU10 rose by 0.5 or 0.32% and closed at 157.7. The SHFE rubber was tepid in a weak position. The main force contract of RU09 fell by 45 or 0.44% and closed at 10,280, and the main force contract of NR09 rose by 10 or 0.11% and closed at 8,720. The quoted price for Qingdao rubber in USD was narrowed by $5 per ton with general inquiries. The quoted price of RSS3 was $1,400 per ton. The spot price or CIF of STR20 was $1,230 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 $1,270 to $1275 per ton.

QinRex News: Recently, Thailand’s Minister of Transportation Sashayan revealed that the Ministry of Transport, the Ministry of Agriculture and Cooperatives will sign a Memorandum of Understanding (MOU) on raising rubber prices on the 12th, investing 85,623,300 baht to process rubber isolation piers and guide signs in the middle of roads for use throughout the country 12,000 kilometers of roads, replacing the more expensive cement isolation pier. From the implementation of this year to completion in 2022, it is believed that 70% of the funds will be available to the rubber farmers. The Thai Rubber Authority emphasized that domestic rubber usage is barely satisfactory, with less than 1,000 tons in half a year.

In terms of concentrated latex, the spot market has a tight circulation, but due to the market’s expectation of increasing domestic and international supply, as well as the weak fluctuation of the SHFE rubber, the transaction center of focus has weakened. According to third-party statistics, the domestic and foreign stocks in the domestic and foreign bonded areas accumulated slightly at the same time week-on-week. Among them, the stocks in the area are about 1.2%, and the stocks outside the area are about 0.7%.

Futures Operation Advice: The SHFE rubber was tepid in a weak position. As for the main contract of RU09, it is advised to pay attention to the support at the bottom of the week. (For reference only)