Crude oil

Yesterday EIA announced weekly data. Crude oil inventories have increased. It is worth noting that the recent balance sheet error item has increased to 1.6 million barrels per day since June. There is a high probability that US production is recovering and EIA’s weekly production data is underestimated. From the current number of fracturing units, there are signs of recovery at the bottom. Due to the release of DUC capacity, we believe that US crude oil production is bottoming out. On the contrary, from the performance of refined oil, gasoline is better than distillate, especially in PADD1 area. Affected by Bayway refinery failure and sluggish imports, gasoline inventories in PADD1 area declined rapidly, but gasoline inventories in PADD3 area are still increasing. From the perspective of refinery operating rate, it is still maintained at 75%~80%. In the absence of a significant improvement in plant profits, the motivation for US refineries to increase operating rates is still insufficient. In terms of operation, it is advised to maintain the neutral strategy.

Iron Ore

The position on I2009 contract increased by 14,469 lots and closed at ¥851.0 per ton, the position on I2101 contract increased by 4,598 lots and closed at ¥768 per ton.

【Important Information】

1. According to data from the German Iron and Steel Federation (WV Stahl), in June, German crude steel production was 2.48 million tons, a decrease of 27.3% from the same period last year, and the third consecutive month of decline in output. In June, the country's blast furnace steel output was 1.53 million tons, a year-on-year decrease of 35.8%; the electric arc furnace steel output was 941,000 tons, a year-on-year decrease of 7.3%. From April to June this year, German crude steel production fell by 26% year-on-year; from January to June, crude steel output was 17.46 million tons, down 15.7% year-on-year.

2. According to the analysis of the China Association of Automobile Manufacturers, in the first and mid-July, 11 major companies had a total of 942,000 vehicles sold, a month-on-month increase of 2.7% and a year-on-year increase of 36.5%. Among them, passenger vehicle sales totaled 825,000 units, an increase of 5% month-on-month and 33.6% year-on-year; commercial vehicle sales totaled 117,000 units, a month-on-month decrease of 10.7% and a year-on-year increase of 61.7%.

3. In terms of spot, the PB powder in Rizhao Port is ¥853 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥906 per ton.

【Trading Strategy】

1. Arbitrage: The recent inventory in port has increased significantly. Although the Australian shipments have declined, the high-pressure ports have not yet been reflected in the spot inventory. Taking into account the pressure on the port to digest in August, the port inventory is expected to be difficult to sell, and the recent PB powder is no longer cost-effective compared to the ultra-special blend of card powder, which may be a drag on medium and high-grade products in the later stage. Under the high inventory of superimposed steel, the demand will face high temperatures in the future. Steel prices are not expected to rise significantly before the peak season. The spot iron ore‘s driving force turned weak gradually, it is advised to consider building long 01 hot roll and short 01 iron ore.

2. Option strategy: The up driving force of iron ore is weak, it is recommended to sell 2101 call option, that is I2101-C-790. (For reference only)

PTA

The overhaul of TA factory remains to be seen, and downstream production and sales drops slightly

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 the unilateral strategy, it is expected to fall gradually; for the strategy across varieties, it is estimated that PTA in July and August will once again accumulate 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, the 9-1 reverse cash and carry strategy was under pressure and close to the rolling window at -200. 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 fell by 70 or 0.66% and closed at 10,590, The main force contract of JRU12 rose by 0.6 or 0.38% and closed at 159.6. Yunnan WF closed at 10,450 to 10,550 yuan/ton, Hainan SCRWF closed at 10,550 yuan/ton, the second standard rubber closed at 10,150 yuan/ton, and Thailand’s RSS3 closed at 12,800 to 12,900 yuan/ton.

About NR: The main force contract of NR10 fell by 45 or 0.52% and closed at 8,680. The main force contract of TF10 fell by 0.8 or 0.66% closed at 121.2. The quoted price for Qingdao rubber in USD fell slightly by $5 per ton with scarce inquiries. The spot price or CIF of STR20 was $1,250 to $1,260 per ton. The CIF of SMR20 in November was $1,300 per ton. The CIF of mixed rubber from Thailand in December was $1,305 per ton.

Phoenix News: The post-epidemic era is approaching. What direction will the auto market show in the second half of this year? Fu Bingfeng, executive vice president and secretary-general of the China Association of Automobile Manufacturers: "The annual decline in automobiles may converge to less than 10%." CAAM: The annual automobile market declines by 10%, and the rural market may explode. Entering the second quarter, the domestic auto market has gradually recovered. According to data from the CAAM, in April, China’s automobile production and sales were 2.102 million and 2.07 million; in May, automobile production and sales reached 2.187 million and 2.194 million; in June, automobile production and sales were 2.325 million and 230.0 million.

Today is the day of the Sea of Japan, and the local financial market is closed. According to third-party statistics, the Qingdao Free Trade Zone has accumulated inventory for the second consecutive week. The area scale is 143,000 tons, which increased by 1.7% week-on-week, and the scale outside the zone is 660,000 tons, which increased by 1.7% week-on-week. Export orders for downstream tire production lines increased week-on-week, and replacement orders slowed down.

Futures Operation Advice: The main RU09 contract went up and the daily position has increased. The RU01 contract is likely to go down, and it is advised to pay attention to the support at the previous low level at 11,580.

(For reference only)