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Daily Market Review on Specified Futures Products 2020.09.08

Fang submitted 2020-09-08 10:14:37

Crude oil

After recent adjustments, oil prices have fallen by nearly 10% in recent months. At present, the core factor that can support oil prices in the short-term lies in the economics of oil arbitrage in floating warehouses. According to Bloomberg's oil tanker calculations, in the North Sea and the Mediterranean, floating storage oil cost in three months is roughly $1.07/barrel, Brent’s three-month difference is $1.4/barrel, and the six-month oil storage cost is $2.5/barrel, and Brent’s six-month difference is $2.7/barrel. With the increase in discounts in recent months, floating warehouses have begun to make profits again. However, the current discount level is not enough to support floating warehouses in the Middle East and the Asia-Pacific region. Therefore, the current monthly difference may need to be further expanded. From the perspective of short-term drivers, Saudi Arabia’s OSP subsidy adjustment is larger than market expectations. With Iraq’s application for an extension of the compensation period for production reduction, the market is worried that Saudi Arabia threatens to use price wars again to force cheating countries to submit, which remains to be seen until the OPEC meeting on September 17 at the earliest.

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.

Iron Ore

The position on I2101 contract increased by 13,446 lots and closed at ¥864 per ton, the position on I2105 contract increased by 1,113 lots and closed at ¥786 per ton.

Important Information

1. Mysteel Group: The total arrivals from 45 ports across the country were 23.993 million tons, a decrease of 558,000 tons from the previous month; the total arrivals from the six ports in the north were 12.98 million tons, an increase of 131,000 tons from the previous month. The total arrivals from 26 ports across the country was 23.029 million tons, a decrease of 161,000 tons from the previous month.

2. Mysteel Group: The weekly iron ore shipment volume in Australia decreased by 1.3 million tons from the previous month, and the volume in Brazil decreased by 150 tons from the previous month.

3. In terms of spot, the PB powder in Rizhao Port is ¥950 per ton, and the Golden Bubba powder in Rizhao Port is equivalent to ¥1,004 per ton.

Trading Strategy

1. Arbitrage: This week, port inventories have accumulated slightly, and there has been a significant decrease in port congestion, port inventories and port congestion has fallen by more than 2 million tons in total. The overall supply and demand of iron ore has been balanced recently, and the overall delivery of Australia and Pakistan has been high. However, foreign production has begun to resume production and the proportion sent to China may decline later. Pig iron is more likely to remain high without considering environmental protection during peak seasons. The market is expected to be fluctuated at high leve. It is recommended to wait and see for now.

2. Option strategy: It is advised to long 05 iron ore and short i2101-C-950 at the same time.


The production and sales remain weak, and it is advised to focus on the condition of overhauls in the future

In September, it was the first time to realize destocking if all overhauls are fulfilled, but the absolute number of inventories will still be high after the destocking; in October, if the overhauls are slow, there will be an expectation of inventory accumulation, and if all the overhauls are fulfilled, the inventory will decrease in stage. In terms of the unilateral strategy, it is advised to be neutral; for the strategy across varieties, the high inventory problem has not been resolved yet, and it is not advised to maintain the strategy across varieties, 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 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.

Natural Rubber

RU: The main force contract of RU01 rose by 55 or 0.44% and closed at 12,520. The main force contract of JRU02 fell by 0.4 or 0.22% and closed at 179.6. Yunnan WF closed at 11,450 to 11.700 yuan per ton, Hainan SCRWF closed at 11,600 to 11,750 yuan per ton, the secondary standard rubber closed at 10,650 to 10,700 per ton, and Thailand’s RSS3 closed at 14,800 to 15,200 yuan per ton.

NR: The main force contract of NR11 rose by 55 or 0.58% and closed at 9,510. The main force contract of TF12 fell by 1.1 or 0.80% closed at 137.1. The quoted price for Qingdao rubber in USD fell by $5 to $10 per ton. The CIF of STR20 in December was $1,465 to $1,470 per ton. The CIF of SMR20 was $1,400 to $1,410 per ton. The CIF of mixed rubber from Thailand in December was $1,435 to $1,440 per ton.

China Automobile Dealers Association: The latest issue of the "Vehicle Inventory Alert Index Survey of China's Auto Dealers" VIA (Vehicle Inventory Alert Index) shows that in August 2020, the auto dealer inventory alert index was 52.8%, a decrease of 9.9 from the previous month. Percentage points, a decrease of 0.5 percentage points from the same period last year. The inventory alert index is above the line of prosperity and decline. The prosperity of the automobile distribution industry has improved, but it is still in the recession range.

As of August, the NINO 3.4 index closed at -0.4°C, triggering the La Nina report. In terms of synthetic rubber, styrene-butadiene rubber, supported by the rise in related varieties of SHFE rubber and upstream butadiene, has been sold at higher prices by distributors, and transactions was good. In August, domestic auto production increased by 11.3% year-on-year, which was a drop from July's +26.8%.

Futures Operation Advice: For the main RU01 contract, it is advised to stop profit and wait and see. (For reference only).

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