The impact of Hurricane Laura on the market last week was basically in line with our previous expectations. Although the intensity of the hurricane was close to level 5 when it landed, its path avoided the refining and chemical town of Houston and did not bring continuous rainfall to the Louisiana area. Therefore, the impact on the operation of the refinery is short-lived. According to Platts and other sources, the hurricane’s peak landfall resulted in the closure of approximately 2.65 million barrels per day of refinery production capacity, but these refineries will basically resume production before the weekend, except for the Lake Charles refinery owned by Citigo with production capacity of 420,000 barrels per day, which is expected to take 28 days to fully restart due to equipment failure. From the upstream situation, the offshore oil production closed last week reached 1.5 million barrels per day, accounting for about 84% of the total output of the U.S. Gulf. Also, since the equipment was not significantly damaged, it is expected that this part of the production loss will resume this week. , Hurricane Laura’s impact on the oil industry chain is basically minimal, and from the market’s response, the cracking spread in the US market has also quickly fallen from a rebound, and the market has fully priced Laura’s impact.
In the near future, the market will return to the dominance of fundamentals. We believe that the main contradictions are as follows: 1. OPEC's compliance rate and the implementation of compensation cuts. Recently, some countries such as the UAE have significantly exceeded production and are expected to exceed quotas in October by about 900,000 barrels per day, the market once again doubted the implementation of OPEC countries’ production cuts; 2. The decline in U.S. production was affected by the impact of oil prices, the U.S. shale oil production capital expenditure this year fell sharply by 36%, and although the recent number of its drilling rigs has stabilized, it has dropped by nearly 70% compared to the peak period of this year. The production characteristic of shale oil is that once new wells are not put into production, the decline in the production of old wells will drag down the overall production decline. Therefore, whether the US crude oil production in the fourth quarter will decline remains to be seen; 3. The recovery of China's demand is not optimistic at present. In addition to the current slowdown in the clearance of floating warehouses at sea (China's increased US crude oil purchases also dragged down the clearance of floating warehouses), China’s high diesel inventory has led the main business to increase its export of refined oil since August. Looking back, some of China’s overbought crude oil was converted into crude oil inventory, and some of it was converted into refined oil inventory through refineries, which is not consumed by the terminal. The converted inventory will inevitably cause new pressure on the market. We believe that if the overall demand in the Asia-Pacific does not improve much, the final result will either be further reductions in the load of refineries in other countries in the Asia-Pacific region, or the plant of domestic refineries reduces the load. 4. The situation in the US general election. If Biden is elected, the US's severe sanctions on Iran and Venezuela may change to some extent. If Biden re-enables Obama’s Iran nuclear agreement or negotiates with Iran, Iran’s oil production capacity is likely to be released, so Biden’s election will have a major negative effect on the oil market. Currently, Iran, Venezuela and Libya are important factors that can break the current impasse in the oil market.
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
The position on I2101 contract decreased by 4,364 lots and closed at ¥836 per ton, the position on I2101 contract increased by 7,11 lots and closed at ¥772.5 per ton.
1. The data shows that as of August 28, China has issued 1107.757 billion yuan of local bonds in August. In addition, from August 29 to 31, Jiangsu, Zhejiang and other places plan to issue 91.965 billion yuan of local bonds. The monthly issuance scale is expected to reach 119.722 billion yuan, far exceeding the level of the previous two months. In June and July this year, the scale of local government bond issuance was 286.678 billion yuan and 272.238 billion yuan respectively. As of the end of July, a total of 2,266.1 billion yuan of new special bonds have been issued across the country this year. The scale of local government special bonds this year are planned to be 3.75 trillion yuan, which means that local governments are expected to issue approximately 850.7 billion yuan in new special bonds from September to October.
2. The Shanghai Municipal Housing Management Bureau and the Municipal Planning and Resources Bureau held a symposium to listen to some experts and business representatives in the real estate industry to analyze and judge market conditions and countermeasures. Experts and business representatives at the meeting believed that since this year, the city’s real estate market has withstood the impact of the epidemic and, with the joint efforts of all parties, has generally maintained a stable and healthy development trend.
3. In terms of spot, the PB powder in Rizhao Port is ¥930 per ton, and the Yandicoogina powder in Rizhao Port is equivalent to ¥977 per ton.
1. Arbitrage: The demand for iron ore is currently at a high level, but the overall supply is also picking up. Recently, Australia has surpassed the level of last year. There is a possibility of continued improvement in Brazil in the later period. The overall supply and demand are gradually loosening, and steel mills are also suppressing iron ore under low profits. In the heating season, there is also the possibility that production restrictions will affect iron ore demand. From a structural point of view, the stock of coarse powder has rebounded from a low level in the past two weeks. It is recommended to long 01 hot rolled coils and short 01 iron ore.
2. Option strategy: It is recommended to hold the long posiution on put seagull options, that is, sell i2101-C-870 and i2101-P-730, and buy i2101-P-810.
The production and sales of polyester rose sharply first and then fell, there was still no obvious destocking expectation under the situation of concentrated overhauls.
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 of demand.
RU: The main force contract of RU01 rose by 25 or 0.20% and closed at 12,685. The main force contract of JRU01 rose by 3.0 or 1.64% and closed at 185.5. Yunnan WF closed at 11,400 to 11,600 yuan per ton, Hainan SCRWF closed at 11550 to 11,700 yuan per ton, the second standard rubber closed at 10,750 to 10,800 yuan per ton, and Thailand’s RSS3 closed at 14,000 to 14,050 yuan per ton.
NR: The main force contract of NR11 rose by 40 or 0.41% and closed at 9,760. The main force contract of TF12 rose by 2.2 or 1.59% closed at 140.6. The quoted price for Qingdao rubber in USD rose by $5 to $10 per ton. The CIF of STR20 in October was $1,430 per ton. The CIF of SMR20 was $1,385 to $ 1,395 per ton. The CIF of mixed rubber from Thailand in December was $1,415 to $1,425 per ton.
TireWorld News: On August 28, the signing ceremony of the strategic cooperation between Double Coin Group and Tuhu Auto was held in Wuhu, Anhui. Both parties have achieved a new upgrade of the industrial chain through the deep integration of the service industry and the Internet. This cooperation has become another typical case of pushing "Made in China" to a new height of "Wisdom in China". After reaching a strategic cooperation, the two parties will give full play to their respective advantages to jointly promote the digitalization process and industrial upgrading of the automotive aftermarket. The two parties stated that in the future, they will also deepen cooperation in online marketing and product development.
Today coincides with Malaysia’s National Day and the Philippines’s National Heroes’ Day, the local markets are closed. Thailand's recent rainfall was general, with an average daily rainfall of 4.59mm throughout the month, which is lower than July and the cumulative rainfall for three months has not exceeded 50%. The latest RU contract delivery inventory is destocked on a week-on-week basis, and the decline in inventory futures is higher than the inventory subtotal.
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).