Crude oil

Yesterday EIA released weekly data. Among them, crude oil inventories fell more than expected, mainly due to the reduction in crude oil imports. However, at present, the core problem in the United States is still high gasoline and distillate stocks, and refinery construction has been slowly improved. The current US refinery operation rate is maintained at about 75%. In particular, the Meiwan Refinery is under the double suppression of high refined oil inventories and sluggish refining profits. The fundamentals of the Midwest are still relatively good. Canadian imports remain low + the Midwest refinery starts to pick up faster, so we have recently seen that Cushing's inventory decline is significantly greater than the nationwide commercial inventory decline. Looking forward, from the supply side, the current number of rigs and fracturing units has bottomed out, and production may also bottom out in the near future, so the future of the US crude oil inventory will become more dependent on demand, that is, the recovery of demand for refined oil and the speed of destocking. In terms of operation, it is advised to maintain the neutral strategy.

Iron Ore

The position on I2009 contract decreased by 3,145 lots and closed at ¥739 per ton, the position on I2101 contract increased by 6,938 lots and closed at ¥670.5 per ton.

【Important Information】

1. In the entire fiscal year 2019-2020, Tata Steel's net profit reached 23.37 billion Indian rupees (US$ 30932 million), a year-on-year decrease of 74.6%. During this period, the group's sales revenue totaled 1.4 trillion Indian rupees (18.53 billion US dollars), a year-on-year decrease of 11.3%.

2. US Steel said in a statement that it plans to restart the No. 6 blast furnace at Gary Works, mainly because there are already signs that customer demand is recovering. Due to the COVID-19, some automobile manufacturing plants were closed, and steel demand was weakened. Therefore, US Steel Corporation closed its No. 6 blast furnace in late April.

3. The June Caixin China Manufacturing PMI announced on July 1 was 51.2, an increase of 0.5 percentage points from May, the highest since this year, and it was in the expansion range for two consecutive months. This trend is consistent with the manufacturing PMI of the National Bureau of Statistics. The June manufacturing PMI announced by the National Bureau of Statistics recorded 50.9, up 0.3 percentage points from the previous month.

4. In terms of spot, the PB powder in Rizhao Port is ¥765 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥811 per ton.

【Trading Strategy】

1. Arbitrage: Zhaogang's output of building materials remained basically stable, and demand continued to decline significantly. Profits of some steel mills have been low, and there may be a reduction in pig iron in the later period. From a supply perspective, supply pressure will be reduced after the seasonal decline in Australian shipments in July, but Brazil's overall shipments have been at a high level last week, so sustainability needs to continue to be concerned. Overall, the iron ore spot drive may weaken. It is advised to long contract of 2101 of hot rolled and short contract of 2009 of iron ore with small volumes.

2. The demand for short-term accumulation of building materials has weakened significantly. It is recommended to consider selling 2009 call options, that is I2009-C-800. (For reference only)

PTA

Short-term supply pressure is fulfilled, polyester production and sales are still weak

Prospects of the balance sheet: follow-up maintenance expectations and large swings in production, two separate hypothesis estimates. 1) Yisheng and Tongkun have carried out additional maintenance, and continued to remove the warehouse slightly in July. The nodes that accumulated inventory moved to August. (2) The additional overhauls of Yisheng and Tongkun failed to be fulfilled, so they ended removing a small amount of warehouse in June and re-entered the accumulation phase in July. 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 July will accumulate a small amount of warehouse. Chemical products are generally in the accumulation phase in July, and PTA has no obvious difference in strength, but it pays attention to the willingness of upstream factories to maintain and control under the background of low processing fees; 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. It is advised to wait and see, as well as focus on PTA factory inspection and fulfillment wishes of July to August, and the downstream restocking space.

Natural Rubber

About RU: The main force contract of RU09 rose by 25 or 0.24% and closed at 10,250, The main force contract of JRU10 rose by 0.3 or 0.20% and closed at 152.4. Yunnan WF closed at 9,900-10,100 yuan/ton, Hainan Whole Milk closed at 10,000 yuan/ton, the second landmark of production closed at 10,000 yuan/ton, and Thailand’s tobacco tablets closed at 12,300-12,400 yuan/ton.

About NR: The main force contract of NR09 fell by 5 or 0.06% and closed at 8,615. The main force contract of TF09 rose by 0.7 or 0.60% and closed at 117.3. The quoted price for Qingdao rubber in USD remained stable with active inquiries. The spot price or CIF of STR20 was $1,220 to $1,250 per ton. The CIF of SMR20 in August was $1270 per ton. The CIF of mixed rubber from Thailand in October was $1270 per ton.

China Rubber Net: The Indonesian Tire Manufacturers Association (APBI) said recently that it predicts that Indonesia's domestic tire production will drop by 40% year-on-year this year. APBI Chairman Aziz said that due to the impact of COVID-19, domestic and foreign tire consumption has declined. The operating time of domestic factories was shortened to half a day, and tire production was also reduced by half. Due to the increase in the inventory of new car tires, most factories have ceased production.

Domestic supply in Hainan is increasing, and orders for concentrated milk continue to be digested. It is difficult for glue in the direction of thick milk to sustain high premiums. It has dropped to 12,000-12,100 yuan/ton. Currently, the whole milk in the direction of premium milk is about 3,100 yuan/ton. According to the latest third-party statistics, the domestic inventory of Qingdao Free Trade Zone has maintained a stable week-on-week, of which the inventory of the Free Trade Zone is about 140,000 tons, and the stock outside the zone is about 650,000 tons.

Futures Operation Advice: As for the main force contract of RU09, it is advised to hold large quantities and stop the loss at low position recently. (For reference only)