Crude Oil

At present, global refinery profits are still weak. At present, existing refineries have begun to reduce operating rates due to profit and market factors. For example, Indian state oil company IOC plans to reduce the operating rates of its nine refineries from 90% in July to 70%. Under the influence of sluggish profits, more refineries are expected to participate in the production reduction. Due to the future overcapacity, the industry is very pessimistic about the future prospects of refining. Some established refining and chemical groups in Europe and the United States have planned to permanently close some refineries or switch to renewable fuels. Processing plants, after large-scale refining and chemical projects in the Asia-Pacific and Middle East are put into operation in the future, the rate of global capacity elimination will accelerate.

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

Risk: Supply disruption caused by sudden geopolitical events (The first line is the first contract to expire, the other five lines and so on). USD has depreciated sharply.

Iron Ore

The position on I2009 contract decreased by 4,292 lots and closed at ¥903.5 per ton, the position on I2101 contract increased by 2,771 lots and closed at ¥822 per ton.

【Important Information】

1. China Automobile Association: In the first ten days of August 2020, the production and sales of 11 key enterprises completed 473,000 and 384,000 vehicles respectively, a decrease of 24% and 15.2% respectively compared with the first ten days of July. The output increased by 11.2% year-on-year, and the sales volume increased year-on-year. A decrease of 17.9%.

2. According to foreign media reports, ArcelorMittal announced on August 12 that it plans to build an electric arc furnace for steelmaking at AM/NS Calvert. Once the equipment is completed, the annual capacity of the hot rolling mill will reach 1.5 million tons per year, and at the same time it will produce more kinds of steel products for the market.

3. In terms of spot, the PB powder in Rizhao Port is ¥910 per ton, and the golden bubba powder in Rizhao Port is ¥840-845 per ton, which is equivalent to ¥940-950 per ton of the standard products.

【Trading Strategy】

1. Unilateral Strategy: Pig iron production increased slightly this week, with Shugang hitting a new high of 3,286,200 tons. Demand for iron ore was operating at a high level. Port stocks declined slightly, but the pressure on the port continued to accumulate. At present, the structural problem has not been alleviated, the coarse powder is still falling, the price of mainstream fine ore is relatively strong, the inventory of fine ore such as MNPJ is extremely low, and the price has remained strong. The price quotations of PB powder and golden bubba are still moving up. The demand for building materials is slightly weak, and the market fears still exist. It requires a strong start of terminal demand, and the decline in steel mills' finished product inventories will drive a new round of raw material prices. Before the sharp return of thread demand, iron ore showed a slight upward pressure. It is recommended to consider long positions in recent months to lighten up and leave the market, and establish a long position on the 05 contract after the return.

2. Arbitrage: Use large discounts on iron ore contracts as long positions.

3. Option strategy: In the short term, consider selling volatility, such as selling i2101-c-880 and selling i2101-p-770 (For reference only).

PTA

Fuhua TA drops the negative again, the terminal weaving continues to increase the negative

Prospects of balance sheet: Weekly TA overhaul concentration has rebounded; however, the monthly frequency is still weak. If Yisheng overhaul is not fulfilled, it will continue to accumulate in August; Yisheng overhaul will be flat in August, while at present, the probability of full cashing is not high.

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 RU01 rose by 125 or 1.02% and closed at 12,400. The main force contract of JRU10 rose by 2.3 or 1.35% and closed at 173.3. Yunnan WF closed at 10,900 to 11,000 yuan/ton, Hainan SCRWF closed at 10,950 yuan/ton, the second standard rubber closed at 10,700 yuan/ton, and Thailand’s RSS3 closed at 13,300 to 13,400 yuan/ton.

NR: The main force contract of NR10 rose by 55 or 0.60% and closed at 9,280. The main force contract of TF12 rose by 0.6 or 0.46% and closed at 132.1. The quoted price for Qingdao rubber in USD went down by 5-10 dollar/ton with normal inquiries. The spot price or CIF of STR20 was $1,360 per ton. The CIF of SMR20 in December was $1,390 per ton. The CIF of mixed rubber from Thailand in December was $1,370-$1,375 per ton.

China Rubber News: The National Association of Rubber Manufacturers, Processors and Sellers of Nigeria (NARPPMAN) has called on the federal government to list rubber as one of Nigeria’s main economic crops. The chairman of the association, Peter Igbinosun, said that the association is planning large-scale rubber planting to create 640,000 direct jobs and 160,000 people will be indirectly employed as service providers for the program. . NARPPMAN will plant rubber in 160,000 hectares of rubber plantations in 24 states across the country in the next 10 years. Currently, Nigeria’s small farmers and industrial plantations have about 200,000 hectares of rubber plantations.

The main producing countries are in the peak production season, and the increase in Vietnamese rubber has eased the supply pressure of light-colored rubber. According to Zhuo Chuang's statistics, the domestic all-steel operating rate was 74.4%, and the week-on-week (relative) production increased by 1.4%. The year-on-year increase in production was as much as 49.0% (relatively) due to the temporary decrease in the base number last year. The operating rate of semi-steel also increased by the same amount. Good exports and production support for snow tires started to maintain a high level.

Futures Operation Advice: It is advised to long the main RU01 contract, and set the stop loss at the recent low of 12,240 points. (For reference only).