Crude oil

The balance sheets of the three major institutions’ monthly reports have not changed much

Last week, the three major institutions released monthly reports. Overall, the three major organizations have made little changes to the balance sheet compared to the previous month. The balance sheets of the three major institutions are also more consistent. As demand resumes and OPEC production cuts are maintained, the oil market is expected to be in the second half of the year. From oversupply to short supply, it entered the state of destocking in the second half of the year.

Demand: EIA estimates that the contraction in demand for 2020 will be 8.34 million barrels/day, a decrease of 60,000 barrels/day from the previous month, of which 130,000 barrels/day will be repaired by OECD and 70,000 barrels/day will be repaired by non-OECD. OPEC expects 2020 demand to decline to 9.08 million barrels/day year-on-year, both without corrections last month. The IEA expects that global demand in 2020 will drop by 8.12 million barrels/day year-on-year, up 490,000 barrels/day from the previous month, mainly from the overhaul of China’s demand, which was 580,000 barrels/day from the previous month. infrastructure activities resumed and driving trips increased.

Non-OPEC supply: EIA expects non-OPEC supply to decline by 2.55 million barrels/day in 2020, a reduction of 190,000 barrels/day from last month’s estimate. The main repair country is Russia, which has repaired 160,000 barrels/day. EIA expects US crude oil output to decline by 670,000 barrels/day this year, a slight revision from last month. OPEC expects non-OPEC supply to decline by 3.23 million barrels/day in 2020, up 300,000 barrels/day from last month, mainly due to over 200,000 barrels/day in the former Soviet Union, due to overproduction in some countries from April to May. IEA's non-OPEC supply in 2020 is expected to decline by 3.09 million barrels/day, up 180,000 barrels/day from last month, and the repairs are mainly from North America. IEA believes that total US liquid output will decline by about 890,000 barrels/day this year

OPEC production: EIA caliber OPEC production in May fell by 6.02 million barrels/day to 24.31 million barrels/day, of which Saudi production decreased by 3.05 million barrels/day and Kuwait’s production decreased by 950,000 barrels/day. OPEC caliber OPEC production in May decreased by 6.3 million barrels per day to 24.2 million barrels per day, OPEC's overall production reduction compliance rate was 84%, the Gulf oil-producing countries performed well, but the compliance rate of Iraq and Nigeria was low. The IEA caliber OPEC production in May fell by 6.66 million barrels per day to 24.09 million barrels per day, and the overall OPEC compliance rate was 86%.

Call on OPEC: EIA's estimated COO for 2020 is 24.24 million barrels/day, an increase of 270,000 barrels/day from the previous month. According to the EIA balance sheet, the difference between supply and demand in the first to fourth quarters is 6.6 million barrels/day and 11.5 million barrels/day, -3 million barrels/day, -4.6 million barrels/day. OPEC's estimated COO for 2020 is 23.56 million barrels/day, a decrease of 700,000 barrels/day from the previous month, and COO in the first to fourth quarters is 2050, 1460, 2780, and 31.2 million barrels/day. The IEA's estimated COO for 2020 is 24.26 million barrels/day, an increase of 530,000 barrels/day from the previous month, and the COO in the first to fourth quarters is 2190, 1510, 2880, and 30.3 million barrels/day.

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 increased by 4,385 lots and closed at ¥767.5 per ton, the position on I2101 contract increased by 851 lots and closed at ¥693 per ton.

【Important Information】

1. According to opinion index statistics, in May 2020, TOP100 real estate companies recorded a total sale of 109.272 billion yuan, an increase of 16.9% year-on-year, an increase of 22.7 percentage points from the growth rate in April, and achieved a year-on-year growth rate of single-month sales. Among the TOP20 housing companies, 17 housing companies have recovered full-caliber sales in May year-on-year.
2. From the Ministry of Industry and Information Technology, the Department of Raw Materials Industry learned that from January to May, the national cement output was 769 million tons, a year-on-year decrease of 8.2%, a decrease of 15.7 percentage points from the first quarter, and the cement output in May was 249 million tons, an increase of 8.6% year-on-year, a record high monthly cement production.
3. A few days ago, the Guangzhou Municipal Development and Reform Commission announced the city's key construction projects in 2020, with a total of 675 formal projects and an annual planned investment of 295.9 billion yuan. There are 88 preparatory projects with an annual planned investment of 35.2 billion yuan. Among the newly started projects, the Guangzhou Baiyun International Airport Phase III expansion project, which has received much attention, has a total investment of 48.821 billion yuan and an annual investment of 1.93 billion yuan. It is expected to be completed in 2025.

4. In terms of spot, the PB powder in Rizhao Port is ¥785 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥822 per ton.

【Trading Strategy】

1. Arbitrage: The increase in pig iron output has been relatively small in the near term. Moreover, the recent apparent decline in demand for building materials has been relatively large, and the seasonal decline in demand has been obvious, which may affect pig iron output in the later period. Superimposing the shipment impulse of Australia in June, there may be accumulated stocks in stages. In the short term, the upward drive of the iron ore spot has weakened, and the supply pressure will be reduced after the seasonal decline in Australian shipments in July. The market may have upward momentum to repair the basis. 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

Concentrated additional maintenance under the background of PX low processing fee; polyester inventory rebounded slightly.

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 pulled up. The main force contract of TF09 rose by 1.6 or 1.33% and closed at 122.1. The main force contract of JRU10 rose by 1.4 or 0.89% and closed at 158.2. The SHFE rubber was tepid in a weak position. The main force contract of RU09 fell by 40 or 0.38% and closed at 10,435, and the main force contract of NR09 fell by 20 or 0.23% and closed at 8,860. The quoted price for Qingdao rubber in USD rose by $10 to $20 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 $1,255 per ton. The CIF of SMR20 in August was $1,265 to $1270 per ton. The CIF of mixed rubber from Thailand in October was $1,285 per ton.

The Ministry of Commerce: Recently, Jinyu Tire Group held the groundbreaking ceremony of Jinyu Vietnam's new factory in Fudong Industrial Park, Xining Province, Vietnam. After the completion of the first phase of the project, the annual production capacity of 2 million all-steel radial tires will be formed. At that time, Jinyu Tire Group will further expand its global production capacity layout, promote business expansion in overseas markets, and enhance international competitiveness to better meet the needs of overseas customers.

Rainfall in all major producing provinces in Thailand is normal, with an average daily rainfall of 9.50mm in June, which is higher than the historical average of 39.1%. As of last week, the RU inventory of the Shanghai Futures Exchange was reported to 239,000 tons, only 77,000 tons higher than the stock futures, and there was little change in the inventory; NR inventory continued to remove from the warehouse, and the inventory subtotal was reported to be 63,000 tons, a 3.8% decrease from last week.

Futures Operation Advice: The SHFE rubber is running weakly and the trend is similar to black. As for the main RU09 contract, it is advised to hold multiple contracts with small volumes, and stop the loss at the bottom of last weekend (For reference only)