At present, the crude oil market is still in a deadlock, and the volatility rate has returned to the historical low range. We believe that from a marginal point of view, although China's crude oil procurement has slowed down, OPEC still strictly controls the increase in supply. Superimposed on the failure of the recovery of Libyan ports, supply and demand are still at a deadlock, and the market is gradually clearing inventory.
First of all, on the demand side, from a regional perspective, the Asia-Pacific region is still a marginal variable in demand. It is necessary to consider the slowdown of China's crude oil procurement and the recovery of imports from other Asia-Pacific countries. In June, China’s crude oil imports reached a new record of 13 million barrels per day. As tankers are still stuck in ports, imports are expected to remain high in July. However, due to the slowdown in procurement, we expect crude oil imports to fall from the high level from August. Although the third batch of crude oil import quotas of the Ministry of Commerce were issued in full and the Zhongke Refinery was officially put into operation, we expect that due to the sharp decline in refining profits and the difficulty of increasing the volume of refined oil exports, it is expected that domestic refineries will digest the inventory purchased in the early stage. Crude oil purchases will slow down, and the still tight domestic crude oil inventory is also an important factor suppressing imports. Previously, due to the long demurrage of the tanker, part of the cargo was resold to neighboring countries such as South Korea.
From the perspective of other countries in the Asia-Pacific region, there is a different picture of crude oil imports. From the perspective of import recovery, India, Japan and South Korea are unlikely to increase imports in the short term (Korea's crude oil imports did not drop significantly during the epidemic, while Japan was subject to poor exports of refined oil, and domestic refineries were sluggish and imported refined oil to meet demand). From the perspective of India, according to Kpler's shipping schedule data, India's crude oil imports fell below 3.5 million barrels per day in June, but it is expected to recover to 4 million barrels per day in July. If it is fully restored to the level of imports before the epidemic, the room for further growth in imports is expected to be 500,000 to 800,000 barrels per day. However, due to the current severe situation in India, it is still challenging to fully recover in the short term. In terms of overall demand, we expect to enter a downturn in the recent January to February.
In the European and American markets, the recovery of crude oil imports in the Western Region will be slower than in the Asia-Pacific region. In the United States, due to the epidemic and poor export demand from Latin America, its refinery operating rate is hovering around 75%, while European refineries are affected. The suppression of refinery profit levels is unlikely to increase imports substantially.
Overall, we believe that the current market has returned to the pattern of 2019, and supply and demand have returned to a stage of tight balance. Currently, the ability to break this balance may depend on geopolitics or the black swan event.
In terms of operation, it is advised to maintain the neutral strategy.
The position on I2009 contract decreased by 8,540 lots and closed at ¥824.5 per ton, the position on I2101 contract increased by 4,590 lots and closed at ¥742 per ton.
1. According to data from the National Bureau of Statistics, the scale of national commercial housing sales in June increased by 40% month-on-month, which was a post-epidemic high, and the sales amount broke a single-month record in the past three years. In June, the sales of commercial housing exceeded 2 trillion yuan, a year-on-year increase of 9%, surpassing the same period in 2018 and 2019. The sales area exceeded 200 million square meters, a year-on-year increase of 2.1%. In terms of overall scale and growth rate, in the first half of the year, the national property market completed a V-shaped reversal after experiencing a 20-year low in sales scale in the first half of the year, and reached a new high by the middle of the year.
2. According to data from the China Travel Association, July has entered the traditional off-season for sales, but most manufacturers are under constant pressure to complete their annual targets. In the same period last year, affected by the switchover of the National VI, the month-on-month decline was relatively large. The survey shows that in July this year, the manufacturer's goal is to increase by 6% year-on-year. Combining the survey samples with 80% of the overall market, it is possible to initially launch the narrow passenger car retail market this month at about 1.53 million, a slight increase of 3% year-on-year.
3. In terms of spot, the PB powder in Rizhao Port is ¥835 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥890 per ton.
1. Arbitrage: Recently, the port inventory has increased significantly. The coarse powder inventory began to accumulate last week, and the pig iron and dredging ports remain at a relatively high level. The steel mills are still profitable. If the demand for building materials improves after the rainy season, the reduction of pig iron is expected to be limited . The pressure on arrivals in Australia in the later period is expected to decrease significantly, and there is no trending accumulation expectation. The basis is still large., and it is recommended to cash and carry arbitrage on 2101-2105.
2. Option strategy: It is recommended to consider selling 2009 put options, that is I2009-P-750. (For reference only)
PTA maintenance is still slow, and the downstream polyester gradually decreases
In the context of PTA still having processing profits, the possibility of additional overhauls at Yisheng and Tongkun has decreased, combined with the reduction in polyester production, which quickly accumulated in July to August. 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. The performance of the cross-species may be weak, but the willingness of the upstream factory to maintain and control should still be judged based on the change in processing fees; for strategy across period, Yisheng Tongkun's July-August maintenance assumptions are still high after cashing. 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.
About RU: The main force contract of RU09 fell by 80 or 0.75% and closed at 10,530, The main force contract of JRU10 rose by 0.7 or 0.45% and closed at 156.3. Yunnan WF closed at 10,450-10,500 yuan/ton, Hainan Whole Milk closed at 10,400 yuan/ton, the second landmark of production closed at 10,100 yuan/ton, and Thailand’s tobacco tablets closed at 12,800-12,900 yuan/ton.
About NR: The main force contract of NR09 fell by 50 or 0.58% and closed at 8,570. The main force contract of TF09 rose by 0.1 or 0.08% closed at 120.9. The quoted price for Qingdao rubber in USD rose by $10 per ton with general inquiries. The spot price or CIF of STR20 was $1,250 per ton. The CIF of SMR20 in November was $1,290 per ton. The CIF of mixed rubber from Thailand in December was $1,300 per ton.
US "Hyundai Dealer" news: Recently, the United States has been intensively advancing its tariff investigations on passenger and light truck tires from South Korea, Taiwan, Thailand and Vietnam. The U.S. International Trade Commission voted unanimously, saying there are signs that these products are being sold at below fair prices in the United States. The committee members also determined that the tires from Vietnam were subsidized by the government of that country. The U.S. International Trade Commission members continued the preliminary procedure with a 5-0 vote. The US Department of Commerce will continue to investigate the anti-dumping and countervailing duties imposed on imported tires from these four countries and regions.
Today is the Women's Federation Day in Laos, and the local market is closed. The rainfall in Thailand has been normal recently. Heavy rains have been observed in Surat Thani and Krabi provinces. The current average daily rainfall throughout the territory is 6.75mm, which is equivalent to the historical average of 7.66mm in the same period. In the upstream of synthetic rubber, Sinopec slightly raised its butadiene quotation to 3,700 yuan/ton, and processing plants were less enthusiastic in purchasing when the raw material inventory was adequate.
Futures Operation Advice: The main change of the month is imminent. It is advised to wait and see for the main force contract of RU09. As for the main contract of RU01, it is advised to pay attention to the support at the previous low of 11,570 points (For reference only).