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Daily Market Review on Specified Futures Products 2020.08.26

Fang submitted 2020-08-26 09:57:46

Crude oil

At present, the impact of Hurricane Mark’s drastically weakened wind is limited, but Laura is expected to make landfall at the junction of Louisiana and Texas and be upgraded to a Level 3 hurricane, and its wind direction may be westward, which will affect the refinery in Houston. Therefore, the potential impact cannot be ignored. According to Energy Aspect’s estimates, major refineries in Louisiana are currently shutting down on a large scale, involving a production capacity of about 3 million barrels per day. The arrival of the hurricane will support the cracking spread in the U.S. Gulf region. It is conducive to the expansion of the WTI-Brent spread, but if Laura does not lead to floods like Hurricane Harvey in 2017, which causes the refinery to shut down for a long time, the refinery will resume production faster without equipment damage after the hurricane. There is a big difference between current market situation and 2017. The U.S. Gulf region still has sufficient reserves of refined oil products. Therefore, if Laura’s impact is not beyond expectations, the cracking spread will rebound in a short time.

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 11,895 lots and closed at ¥901 per ton, the position on I2101 contract decreased by 870 lots and closed at ¥812 per ton.

Important Information

1. World Steel Association: In July 2020, global crude steel production fell by 2.5% year-on-year to 152.7 million tons. In July 2020, China's crude steel production increased by 9.1% year-on-year to 93.4 million tons. Japan’s crude steel output was 6 million tons, a year-on-year decrease of 27.9%; South Korea’s crude steel output was 5.5 million tons, a year-on-year decrease of 8.3%. In July 2020, German crude steel production was 2.4 million tons, a year-on-year decrease of 24.7%. The estimated value of crude steel production in the EU this month is 9.8 million tons, down 24.4% year-on-year. In July 2020, US crude steel production was 5.2 million tons, a year-on-year decrease of 29.4%.

2. CAAM: In early and mid-August, the production and sales of passenger vehicles were 934,000 and 825,000, respectively. Compared with the first and mid-July, production decreased by 16.1%, sales increased by 0.1%, production increased by 39.9% year-on-year, and sales decreased by 7.9% year-on-year; the production and sales of commercial vehicles reached 177,000 and 114,000, respectively, a decrease of 14.2% and 2.7% compared with the first half of July, and a year-on-year increase of 88.2% and 36.3% respectively

3. In terms of spot, the PB powder in Rizhao Port is ¥930 per ton, and the golden bubba in Rizhao Port is equivalent to ¥977 per ton.

Trading Strategy

1. Arbitrage: Inventories in Port 15 increased slightly this week. Inventories of PB powder, Mack powder, and Newman powder increased slightly. Golden bubba inventories declined slightly, and coarse powder began to show a slight accumulation at the low level. Australian shipments continued to increase, and overall supply and demand tend to be excessive easing and low short-term steel mill profits will suppress raw materials. Limiting sintering and increasing berths will have a certain effect on resolving structural problems. It is recommended to long hot rolled coils and short iron ore.

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.

PTA

The production and sales of polyester are improving under the background of increasing efforts in preferential promotion of filament

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 rose by 30 or 0.24% and closed at 12,575. The main force contract of JRU01 rose by 1.5 or 0.86% and closed at 176.3. Yunnan WF closed at 11,350 to 11,400 yuan per ton, Hainan SCRWF closed at 11,300 to 11,400 yuan per ton, the second standard rubber closed at 10,600 to 10,700 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 5 or 0.05% and closed at 9,580. The main force contract of TF12 fell by 0.7 or 0.51% closed at 136.1. The quoted price for Qingdao rubber in USD fell by $5 to $10 per ton. The spot price or CIF of STR20 in October was $1,400 per ton. The CIF of SMR20 was $1,370 to $ 1,380 per ton. The CIF of mixed rubber from Thailand in December was $1,405 to $1,410 per ton.

QinRex data: From January to June, Thailand's natural rubber production reached 2.25 million tons, a decrease of 1.8% from 2.3 million tons in the same period last year. In terms of specific varieties, the output of RSS3 decreased by 12.7% year-on-year; standard rubber increased by 5% year-on-year; latex decreased by 1.4% year-on-year; mixed rubber decreased by -7.3% year-on-year. From April to June, natural rubber stocks in Thailand showed a continuous monthly downward trend. As of June, natural rubber stocks fell to 385,000 tons, down 17% and 27% from the previous month. Among them, RSS3 accounted for 7.9%; standard rubber accounted for 13.7%; latex accounted for 12.8%; others accounted for 65.6%.

In terms of synthetic rubber, the price of ESBR rose slightly, but under the condition of loose butadiene supply expectations, cost support was weak. According to third-party statistics, the inventory outside the Qingdao Free Trade Zone slightly accumulates about 1.7% week-on-week. The all-steel tire production line maintains a high operating rate despite good exports. The terminal's enthusiasm for stocking semi-steel tires has decreased.

Futures Operation Advice: For the short position on the main RU01 contract, it is advised to set a stop at the recent low level at 12,630. (For reference only).

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