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Daily Market Review on Specified Futures Products 2020.08.04

Fang submitted 2020-08-04 10:46:54

Crude oil

According to the OPEC production data given by various agencies, the month-on-month increase in output in July was mainly due to the reduction of voluntary production reductions in countries such as Saudi Arabia. However, the previous cheating countries such as Iraq and Nigeria have not yet implemented production reductions. The internal discord in OPEC still exists. Russia’s production data in July also saw a slight increase. We expect that the production-limiting alliance will moderately increase production and exports in August, but this coincides with the vacuum period in China’s demand, which has caused a phased mismatch of supply and demand. In terms of the situation, the possibility of recurring stockpiling in the short term cannot be ruled out.
Strategy: Neutral and bearish relatively, reverse cash and carry arbitrage strategy on Brent, long the sixth lines and short the first line

Risk: Supply disruption caused by sudden geopolitical events.

Iron Ore

The position on I2009 contract increased by 6,048 lots and closed at ¥891.5 per ton, the position on I2101 contract increased by 15,637 lots and closed at ¥803 per ton.

Important Information

1. The total iron ore trade inventory of sample companies by Mysteel in this issue is 1579.8, a decrease of 2.3 or 0.1% from last week; among them, the Australian ore was 892.7, an increase of 4.4; the Brazilian ore was 278.6, an increase of 7.7; the remaining 408.4, a decrease of 14.5. Variety structure: card powder 64.5, an increase of 21.2; Newman powder 35.6, a decrease of 2.6; PB powder 132.4, an increase of 8.6; Mike powder 33.0, an increase of 3.1; PB block 99.3, a decrease of 28.7; Newman block 128.6, an increase of 10.6; printing ball 87.1, Increase by 24.8.

2. The Export Promotion Committee stated in an analysis report released on the same day that although India’s exports of engineering products in June fell by 7.24% year-on-year, exports of steel products in that month still increased by more than 100%. In June 2020, India’s steel exports increased to US$1.32 billion, a year-on-year increase of more than 100%, while the figure for the same period last year was US$653.52 million.

3. In terms of spot, the PB powder in Rizhao Port is ¥875 per ton, and the golden bubba in Rizhao Port is equivalent to ¥916 per ton.

Trading Strategy

1. Arbitrage: This week, the shipments from Australia and Brazil have all declined slightly, and the overall change is not much. Australia’s recent arrival pressure is expected to decrease. At present, iron ore demand remains high and pig iron will increase further. Short-term overall inventory pressure is expected to be limited, and structural contradictions have not yet resolved, the price difference between PB and gold Bubba is still large, Gold Bubba inventory is still declining, the pressure on the futures has not yet been clearly reflected, and there is still a certain basis difference in 09. It is recommended to hold the cash and carry arbitrage strategy position on 9-1 iron ore.

2. Option strategy: There is still a certain basis on the current month contract. It is recommended to sell I2009-P-850. (For reference only)


The overhaul has realized gradually

In the context of PTA still having processing profits, there is still no obvious additional overhaul. 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 advised to be neutral and bearish relatively; 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 RU01 rose by 55 or 0.45% and closed at 12,195. The main force contract of JRU01 rose by 4.2 or 2.59% and closed at 166.3. Yunnan WF closed at 10,450 to 10,700 yuan per ton, Hainan SCRWF closed at 10,750 yuan per ton, the second standard rubber closed at 10,600 yuan per ton, and Thailand’s RSS3 closed at 13,050 to 13,100 yuan/ton.

NR: The main force contract of NR10 rose by 45 or 0.50% and closed at 9,085. The main force contract of TF10 rose by 1.4 or 1.13% closed at 125.2. The quoted price for Qingdao rubber in USD rebounded by $5 to $10 per ton with general inquiries. The spot price or CIF of STR20 was $1,290 per ton. The CIF of SMR20 in November was $1,305 to $1,310 per ton. The CIF of mixed rubber from Thailand in December was $1,320 to $1,325 per ton.

Citing a news from the First Commercial Vehicle Network: In July, China's heavy truck market is expected to sell more than 140,000 vehicles of various types, a decline of 16% from the previous month and an increase of 89% year-on-year. This increase also means that the average monthly increase in heavy truck sales in April, May, June, and July reached 70%. The data of over 140,000 vehicles also created a new high in July sales in the heavy truck industry, which is more than 50,000 more than the previous historical record of 90,200 vehicles in July 2017.

As of July, the NINO 3.4 index closed at -0.2°C, continuing to be close to La Niña. The last July was the first July without typhoon in 71 years, and the weather in the main producing areas was stable. However, the No. 3 typhoon "Senrak" was generated in early August. Constrained by the rise in raw material prices, downstream tire companies have raised their quotations for finished tires one after another, among which Bridgestone's increase was up to 4%.

Futures Operation Advice: It is advised to long a slight position on the main RU01 contract when the market is falling and focus on the support at the previous high level at 12,020. (For reference only).

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