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Daily Market Review on Specified Futures Products 2020.07.31

Fang submitted 2020-07-31 09:57:07

Crude Oil

Oil prices fell sharply yesterday. From the news, there was no significant negative news on the fundamental sides. But according to the GDP and the number of people claiming relief last night, the data shows that the current state of the US economy is weak. Although the data itself did not exceed expectations, it still sounded the alarm for the crude oil market. From a fundamental point of view, we also mentioned in the previous morning paper that under the influence of China’s slower-than-expected demand and the increase in exports from the cap-production alliance, the trade balance in the Atlantic Basin is being broken, and there are still nearly 5 million barrels. Angolan crude oil of Angola has not yet been sold, and US exports to Europe will continue to increase. Under the double blow of macroeconomic and fundamentals, we expect the crude oil market will usher in a round of adjustment.

Strategy: Neutral and bearish relatively, Brent reverses, buys six lines and throws the first line

Risk: Supply disruption caused by sudden geopolitical events.

Iron Ore

The position on I2009 contract decreased by 23,303 lots and closed at ¥832.5 per ton, the position on I2101 contract increased by 5,537 lots and closed at ¥747.5 per ton.

Important Information

1. The Politburo meeting of the CPC Central Committee: To ensure that the macro policy is implemented and effective, the meeting pointed out that the fiscal policy should be more proactive and effective. It is necessary to guarantee funds for the construction of major projects and focus on quality and efficiency. Monetary policy should be more flexible, moderate, and precise. It is necessary to maintain a reasonable growth in the money supply and the scale of social financing, and promote a significant reduction in comprehensive financing costs. It is necessary to ensure that the focus of new financing flows to manufacturing, small, medium and micro enterprises. Macroeconomic policies should strengthen coordination and cooperation, and promote fiscal and monetary policies to form an integrated effect with employment, industry, and regional policies.

2. According to foreign media reports, ArcelorMittal USA's Cleveland plant announced on July 24 that due to the impact of Covid-19, as of August 1, it will lay off 425 employees in Ohio, USA. Cleveland factory. The company said that many steel companies in the United States are still suspended due to the impact of the epidemic. Although a small number of companies have begun to reopen one after another, business conditions are still suppressed and demand has not improved significantly in the short term. In addition, mass layoffs may be carried out "indefinitely", but are now expected to last more than six months.

3. In terms of spot, the PB powder in Rizhao Port is ¥843 per ton, and the golden bubba powder in Rizhao Port is equivalent to ¥886 per ton.

Trading Strategy

1. Arbitrage: This week, the overall inventory of the port has accumulated slightly, and the port pressure has also decreased slightly. The port inventory has decreased slightly, the coarse powder is still falling, and the pig iron output continues to rise. At present, the demand for iron ore remains high, and the pressure on arrivals in Australia has decreased in the later period. The overall inventory pressure is expected to be limited in the short-term. The structural contradiction has not been resolved. The price difference between PB and golden Bubba is still large. The golden Bubba inventory is still declining. The pressure has not yet been clearly manifested, and there is still a certain basis in 09. It is recommended to cash and carry arbitrage iron ore with light positions.

2. Option strategy: The upward drive of iron ore has weakened, but there is still a certain margin in the near-month contract. It is recommended to sell I2009-P-780. (For reference only)


Polyester production and sales have strengthened again, and terminal weaving texturing is still improving

Prospects of balance sheet: In the context of PTA still having processing profits, the possibility of additional overhaul at Yisheng is uncertain. The inventory will accumulate if the overhaul doesn’t happen, and will not accumulate if it happens, while the inventory still remains at high level. In terms of the unilateral strategy, it is expected to fall gradually; for the strategy across varieties, it is estimated that possibility of overhaul of PTA in August is still large. 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

RU: The main force contract of RU09 fell by 85 or 0.78% and closed at 10,800. The main force contract of JRU10 rose by 1.8 or 1.12% and closed at 163.1. Yunnan WF closed at 10,950 to 11,000 yuan/ton, Hainan SCRWF closed at 11,000 yuan/ton, the second standard rubber closed at 10,600 yuan/ton, and Thailand’s RSS3 closed at 13,300 to 12,350 yuan/ton.

NR: The main force contract of NR10 fell by 95 or 1.05% and closed at 8,925. The main force contract of TF10 rose by 0.4 or 0.32% closed at 123.8. The quoted price for Qingdao rubber in USD went down slightly with normal inquiries. The spot price or CIF of STR20 was $1,290 per ton. The CIF of SMR20 in December was $1,310 per ton. The CIF of mixed rubber from Thailand in December was $1,330 per ton.

Internet news: Continental continues to increase production capacity in order to meet market demand. A few days ago, a relevant person from Continental Tire (China) Co., Ltd. revealed that Continental will promote the latest project investment in the future and turn the Hefei plant into a smart factory with an annual output value of over 10 billion yuan. By then, the company will reach an annual output of 20 million pieces, and the annual output value will also increase to tens of billions of yuan.

Today is the Eid al-Adha, and markets in upstream countries such as Indonesia, Malaysia, Singapore, India, and the Philippines are closed. According to the latest statistics from Zhuo Chuang, the operating rate of domestic all-steel production lines was 71.5%, a week-on-week (relative) increase of 2.3%, and a year-on-year (relative) increase of 0.1%. Some production lines with high inventory of finished products have taken the initiative to reduce production, and exports are increasing in good production lines. The overall performance of the start-up has been good and has returned to the level of the same period last year. Sustainability still needs attention.

Futures Operation Advice: As for the sub-main RU01 contract, it is advised to long it with small volumes and set a stop loss at the previous high of 11,900 points. (For reference only).

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