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Daily Market Review on Specified Futures Products 2020.08.25

Fang submitted 2020-08-25 10:08:58

Crude oil

At present, Hurricane Mark and Laura will enter the U.S. Gulf region one after another in the near future. The market pays close attention to their development path and the related impact on U.S. Gulf oil and gas industry. From the perspective of upstream oil field production, 58% of U.S. Gulf production with a daily output of 1.07 million barrels per day has been closed. From the perspective of logistics, the hurricane may affect the import and export terminal facilities such as LOOP and the Houston Waterway, thereby affecting the rhythm of crude oil import and export. From the perspective of refineries, the impact is expected to be small. Currently, only Motiva has announced that it may shut down the refinary during the hurricane. Overall, the impact of hurricanes on the market is more favorable because upstream production is more affected. The current market expects that the impact of the US Gulf refinery will be limited. However, from the past, if the hurricane did not cause damage to offshore oil platform facilities, its offshore oil production will resume soon, and the impact on the market is almost negligible. We believe that in the short term, the hurricane will mainly support the discount of high-sulfur oil in U.S. Gulf, because high-sulfur oil such as Mars is mainly offshore, while low-sulfur such as WTI Midland is mainly inland, and Mars' discount to WTI will be supported in the short term.

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. The dollar continues to depreciate sharply. The impact of the hurricane exceeded expectations

Iron Ore

The position on I2009 contract decreased by 4,939 lots and closed at ¥918 per ton, the position on I2101 contract decreased by 6,131 lots and closed at ¥824.5 per ton.

Important Information

1. FMG Group released its fiscal year 2020 (Australian fiscal year: July 2019-June 2020) performance report, EBITDA revenue was US$8.4 billion, a year-on-year increase of 38%, and net profit after tax (NPAT) reached US$4.7 billion, an increase of 49% year-on-year. FMG shipped 178 million tons of ore in fiscal year 2020, an increase of 6% year-on-year. In addition to operations and marketing strategies, strong iron ore demand has increased sales prices.

2. In mid-August, the social inventory of five major types of steel in 20 cities was 12.18 million tons, a decrease of 230,000 tons or 1.9% from the previous decade, a decrease of 8.03 million tons or 39.7% from the peak in early March and an increase of 5.36 million tons or 78.6% from the beginning of the year.

3. In terms of spot, the PB powder in Rizhao Port is ¥955 per ton, and the golden bubba in Rizhao Port is equivalent to ¥988 per ton.

Trading Strategy

1. Arbitrage: At present, the overall contradiction of iron ore has weakened, and demand remains at a high level, but overall supply has also recovered. Short-term steel mill profits are suppressing raw materials and the verification of rebar demand remains to be seen; structural problems still exist, and coarse powder inventory is still falling, we are concerned about whether the high-pressure port can be significantly eased, and we suggest that we wait and see for the time being.

2. Option strategy: For short-term rebar demand verification, it is recommended to sell the strangle option, that is, sell i2101-p-770 and sell i2101-C-870.


Production and sales of polyester was still weak, and there is still an expectation of TA overhaul

The inventory in August turn to be flat from quick accumulation. In September, if Yisheng overhauls were not realized, the inventory will continue to accumulate in September; if Yisheng overhauls were realized, the inventory will be flat. In terms of the unilateral strategy, it is advised to be neutral and bearish relatively; for the strategy across varieties, it is estimated that there will be an accumulation in the inventory of PTA in September, 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, the inventory are still high and the warehouse receipt pressure is still there, the 9-1 reverse cash and carry arbitrage strategy was under pressure and close to the rolling window at -200. It is estimated that there will be a slight accumulation in inventory in September and October, and the 1-5 cash and carry arbitrage strategy may rebound with TA overhauls, and after overhauls, the inventory accumulation expectation will return and it is advised to remain the 1-5 reverse cash and carry arbitrage strategy. It is advised to focus on PTA factory inspection and fulfillment wishes, and the downstream restocking space and improvement demand.

Natural Rubber

RU: The main force contract of RU01 fell by 40 or 0.32% and closed at 12,635. The main force contract of JRU01 rose by 1.5 or 0.87% and closed at 174.8. Yunnan WF closed at 11,300 to 11,450 yuan per ton, Hainan SCRWF closed at 11,300 yuan per ton, the second standard rubber closed at 10,600 yuan per ton, and Thailand’s RSS3 closed at 13,800 to 13,900 yuan per ton.

NR: The main force contract of NR11 fell by 55 or 0.57% and closed at 9,645. The main force contract of TF12 rose by 2.3 or 1.71% closed at 136.8. The quoted price for Qingdao rubber in USD increased by $20 per ton. The spot price or CIF of STR20 in October was $1,405 to 1,410 per ton. The CIF of SMR20 was $1,370 to $ 1,390 per ton. The CIF of mixed rubber from Thailand in December was $1,405 to $1,415 per ton.

China Rubber News: Recently, the groundbreaking ceremony of the new factory expansion project of YONGLI Europe, a subsidiary of Shanghai Yongli Belt Industry Co., Ltd., was held in Oudkarspel, a small city in the north of Amsterdam, the Netherlands. This time, a brand new production line and various optimization and transformation projects will be built and be relocated to the new factory area. The project is scheduled to be officially put into operation in the first half of 2021.

Regarding concentrated latex, the prices of imported Thai sources are strong, but the high basis and weak domestic demand are the reasons for the maintenance of rigid demand. As of the first ten days of August, the Japanese rubber RSS delivery inventory decreased by 158 tons to 8,218 tons, of which 312 tons was into the warehouse and 470 tons was out of the warehouse. Downstream tire brands have successively issued notices of price increases.

Futures Operation Advice: For the main RU01 contract, it is advised to short a slight position, and set a stop at the recent high level. (For reference only).

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