Crude oil

In June, OPEC+ crude oil exports fell to historical lows, OPEC crude oil exports fell by 1.8 million barrels/day to 17.2 million barrels/day, and Russian Ural crude oil cargo exports also fell to 800,000 barrels/day. But for now, we believe that the tightest time for the supply side has passed. Looking back, from July, Saudi Arabia, the UAE and Kuwait will cancel voluntary production cuts of 1.2 million barrels per day. Recently, the National Oil Company of Libya also plans to restart oilfield production and lift the force majeure of the port. Some production has resumed. Whether OPEC will reduce the scale of production cuts from August depends on the production cut meeting on July 15th. According to the original plan for August, the scale of production reduction began to shrink from 9.7 million barrels/day to 7.7 million barrels/day, and recently Saudi Arabia’s complaints against Nigeria and Angola have increased and threatened to restart the price war if not strictly reduced. In addition, from the perspective of the United States Recently, the number of drilling rigs and fracturing units has basically bottomed out, and production is expected to rebound. Therefore, in summary, we believe that the most tense moment on the supply side has passed. In terms of operation, it is advised to maintain the neutral strategy.

Iron Ore

The position on I2009 contract decreased by 6,999 lots and closed at ¥740.5 per ton, the position on I2101 contract decreased by 568 lots and closed at ¥671.5 per ton.

【Important Information】

1. According to data from the Brazilian Ministry of Foreign Trade (Secex), the total export of Brazilian iron ore in June was 30.05 million tons, an increase of 1.3% year-on-year, the highest monthly export volume in 8 months; it was up from 21.5 million tons in May 40%. The average FOB price of Brazil in June was 62.7 yuan/ton. From January to June, Brazil exported 145 million tons of iron ore, down 11% year-on-year.

2. On July 2, the construction of the Pearl River Estuary Tunnel for the construction of the Shenzhen-Jiangmen Railway Pioneer Section of the major transportation project in the Guangdong-Hong Kong-Macao Greater Bay Area officially began. The Shenjiang Railway passes through Shenzhen, Guangzhou, Dongguan, Zhongshan, Jiangmen and other five cities and passes through the Pearl River Estuary under a tunnel. The construction period is expected to be 5.5 years.

3. Learned from the Shandong Provincial Department of Transportation, from January to June, Shandong’s transportation infrastructure investment completed 109.479 billion yuan, accounting for 59.4% of the planned tasks for the year; in June, the investment was 35.254 billion yuan, an increase of 25.2%.

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 ¥821 per ton.

【Trading Strategy】

1. Arbitrage: This week, the port inventory increased by 276,500 tons, and 23 ships were added to the port. The overall inventory accumulation was obvious, the pig iron began to decline slightly, and the amount of sparse port remained at a high level. The stock of fine ore still declined significantly. The thread table demand has been lower than the same period last year. Some steel mills' profits have been low. There may be a reduction in pig iron in the later period. Brazil's overall shipment last week has been at a high level, and shipments in the third quarter are also expected to improve. 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

PTA basis continues to rebound, but 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 20 or 0.19% and closed at 10,395, The main force contract of JRU10 rose by 0.9 or 0.59% and closed at 153.3. Yunnan WF closed at 10,000-10,200 yuan/ton, Hainan Whole Milk closed at 10,100 yuan/ton, the second landmark of production closed at 10,000 yuan/ton, and Thailand’s tobacco tablets closed at 12,400-12,500 yuan/ton.

About NR: The main force contract of NR09 rose by 65 or 0.75% and closed at 8,750. The main force contract of TF09 rose by 0.7 or 0.60% and closed at 118.0. The quoted price for Qingdao rubber in USD rose by $10 per ton with general inquiries. The spot price or CIF of STR20 was $1,230 to $1,250 per ton. The CIF of SMR20 in August was $1280 per ton. The CIF of mixed rubber from Thailand in October was $1280 per ton.

Sri Trang Agro-Industry: Sri Trang Gloves (Thailand) Public Company Limited was listed on the Thai Stock Exchange on July 2. The public offering price of the stock was 34 baht per share, which increased by +77.94% on the first day of listing to close at 60.5 baht. With the spread of COVID-19, the global demand for rubber gloves has increased dramatically. Sri Trang gloves raised about 15 billion baht (about 3.423 billion yuan) through initial public offering (IPO) to expand rubber gloves production capacity and increase production efficiency. At present, the company's annual production capacity of rubber gloves is 33 billion. The funds raised this time will be used to open new factories and expand the production capacity of existing factories. It is estimated that by 2024, Sri Trang's annual production capacity of rubber gloves will reach 50 billion pieces and will increase to 100 billion pieces by 2032.

With the completion of the backlog of concentrated milk, Hainan glue continued to fall, and the current concentrated milk reported to 11500-11600 yuan / ton. According to the latest Zhuo Chuang statistics, the domestic all-steel operating rate is 66.3%, weekly (relatively) production is reduced by 0.5%, and year-on-year (relatively) production is reduced by 13.5%. During the Dragon Boat Festival, some production lines were suspended and production started. The year-on-year change in overall operating rate in June was unchanged from May. The trading and investment in the replacement tire market is average.

Futures Operation Advice: The main force contract of NR and RU went strong relatively. The people with portfolio strategies of longing RU09 and shorting RU01, longing RU and shorting NR are advised to pay attention to the risks of possible alternative cultivation indicators entering the country. (For reference only)