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Daily Market Review on Specified Futures Products 2020.06.23

Fang submitted 2020-06-23 09:52:59

Crude oil

Although the number of people infected by COVID-19 in some areas such as the United States and Beijing has rebounded recently, the current impact on the recovery of global demand is relatively limited. High-frequency data such as the traffic congestion index show that with the gradual lifting of measures such as the closure of Gree, refined oil consumption is rapidly rebounding. Judging from the weekly volume of refined oil delivery in Spain, the demand has recovered to about 70% of the same period last year. Although the profit of the refinery is still relatively low, the load on the refinery's construction has continued to rise. Under the influence of the scissors difference brought by OPEC + strong production reduction + demand recovery, the spot market of crude oil continues to tighten, especially the discount of medium and heavy crude oil is very strong. Due to the decrease in OPEC+ exports, crude oil buyers on the market have turned to floating warehouse cargoes. The number of positions has started to decline significantly. However, we believe that the continued rebound of crude oil must see continued destocking of crude oil's own inventories + recovery of refinery profits + destocking of refined oil stocks, otherwise this price trend will be unsustainable, especially in the case of a high probability of a high drop in Chinese imports.

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 2,955 lots and closed at ¥754.5 per ton, the position on I2101 contract decreased by 620 lots and closed at ¥681.5 per ton.

Important Information

1. According to the latest data from Clarkson, in May 2020, 32 new orders were signed globally, totaling 607127CGT. Compared with a total of 1,435,888 CGT of 86 newly signed global ships in April 2020, the number fell by 54 from the previous month and the revised gross tonnage fell by 57.72% from the previous month. Compared with the total number of 119 new orders signed in May 2019, a total of 2126239CGT, the number decreased by 87 year-on-year, and the revised gross ton fell by 71.45% year-on-year.
2. China Automobile Association: In the first half of June, the production and sales of 11 key enterprises totaled 1.427 million and 1.083 million, respectively, an increase of 25.8% and 18.1% from the previous quarter, and an increase of 45.9% and 15.7% from the same period last year.
3. The Baltic Dry Bulk Freight Index rose by 3 points on Monday to 1558 points, the highest level since December 6, 2019, thanks to the strong demand for Panamax and Capesize vessels.
Since it plummeted to a low of 393 points in May, it has soared by nearly 300%. The Baltic Dry Bulk Freight Price Index rose 68.5% last week, which was the largest weekly increase ever.

4. In terms of spot, the PB powder in Rizhao Port is ¥770 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥820 per ton.

Trading Strategy

1. Arbitrage: Last week, Australia shipped 17.98 million tons worldwide, an increase of about 1.2 million tons from the previous month, of which 15.22 million tons were sent to China with a decrease of 600,000 tons from the previous month. Brazil’s shipment to the world has also decreased by about 600,000 tons from the previous month. It has slightly decreased compared with last week. Recently, the apparent demand for building materials has fallen sharply, and the seasonal demand has declined significantly. Later, it may affect pig iron output. Short-term iron ore spot upward drive has weakened. However, the current basis of the 09 contract is still relatively large, and the supply pressure will be reduced after the seasonal decline in Australian shipments in July. It is recommended to wait and see in the short term.

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)


The PTA basis fell again, waiting for the next round of PTA maintenance to be fulfilled

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, Yisheng Tongkun's maintenance expectations in July-August assume that the inventory level after de-stocking is still high, the warehouse receipt pressure is still there, and maintains expectations of selling 2009 and buying 2101; also wait for PTA processing profits to hit historical lows and trigger more PTA maintenance expectations before closing position to wait and see. 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 retreated. The main force contract of TF09 rose by 1.2 or 0.98% and closed at 120.9. The main force contract of JRU10 rose by 0.5 or 0.32% and closed at 157.7. The SHFE rubber fluctuated slightly. The main force contract of RU09 rose by 35 or 0.34% and closed at 10,385, and the main force contract of NR09 rose by 60 or 0.68% and closed at 8,820. The quoted price for Qingdao rubber in USD fell by $10 to $20 with general inquiries. The quoted price of RSS3 was $1,400 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 to $1290 per ton. News on June 20 said that the Thai government plans to spend 2.8 billion US dollars to strengthen highway facilities, and to take advantage of the country's rich rubber to help boost the economy. The Thai government’s latest plan is to use rubber for road safety enhancement projects, use 1 million metric tons of rubber to make 12,282 kilometers of mudguards, and 1,063,651 highway guide bars. The Thai Academy of Science and Technology tested vehicles with speeds ranging from 90 km/h to 100 km/h and found that roadblocks covered with a thick rubber layer can reduce the impact of vehicles in collisions by as much as 80%.

The domestic quotation of glue in Hainan remained high. The state-owned whole milk reported 8900 yuan/ton for glue, and the concentrated latex reported 14000-14100 yuan/ton for glue. As of June 10, Japan's TOCOM delivery inventory decreased by 53 tons to 8714 tons, of which 589 tons were stored and 642 tons were exported.

Futures Operation Advice: The SHFE rubber fluctuated slightly. 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)

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