Crude oil

Oil prices continued to retreat. We believe that the logic behind this round of callbacks is: 1. The US dollar has stabilized and rebounded recently, and the most profitable factor that previously supported oil prices has reversed; 2. Recently, the number of new infections in individual countries such as the United States and the United Kingdom has increased, triggering the market concerns about the second outbreak of the epidemic in winter; 3. Iraq’s August production cut was not as expected and the application for an extension of the compensation period for production cuts made the market suspect the OPEC production cut implementation rate; 4. Saudi Arabia’s reduction of OSP reflects the current weakness in refinery profits and crude oil consumption; 5. China's crude oil imports fell significantly in August, and refined oil exports increased significantly. Overbought in the second quarter gradually turned from positive feedback to negative feedback on the global market. In general, the monthly difference structure and physical discounts of the crude oil market have begun to weaken since August, reflecting the deterioration of fundamentals, but the unilateral and monthly differences have deviated, and this adjustment is similar to the fourth quarter of 2018. After Iran’s sanctions were falsified, the unilateral return to the monthly difference fell. In the short term, unless OPEC can respond quickly, it will still need to form a deeper contango structure to re-stimulate floating warehouses.

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 15,176 lots and closed at ¥849 per ton, the position on I2105 contract increased by 1,256 lots and closed at ¥770.5 per ton.

【Important Information】

1. Mysteel Group: In Australia, berth No.1 and No.2 of WALCOTT port continue the maintenance plan last week, which will affect 5-day operation this week, and the estimated impact will be 550,000 tons. In addition, the maintainance for berth No.5 and No.6 of the port will start on September 11 and will affect 3-day operation this week. The estimated impact is about 440,000 tons. Therefore, the total impact of the Australian berth maintenance is expected to be about 990,000 tons this week. In addition, berth No. 5 of Geraldton Port (GERALDTON) from No. 7 to No. 11 may be affected by waves. In Brazil, the Pier berth No.2 e Port of Tubarão (TUBARÃO) starts to be overhauled on September 9, maintained for 5 days this week. The estimated impact will be 450,000 tons. In addition, the Pier No.3 in south of the Port of Madeira (PDM) will be overhauled. It will start on September 8 and end on September 11, which will affect 4-day operation this week. It is estimated that the impact will be about 380,000 tons. In addition, the Pier No.4 nouth berth ends the maintainence on the 7th and affected 1-day operation this week, which is 81,000 tons. Therefore, it is estimated that the total impact of Brazilian berth maintenance this week is about 910,000 tons.

2. On Tuesday, the iron ore statistical sample port inventory was 81.89 million tons, an increase of 1.97 million tons from the previous month; the fine ore was 43.15 million tons, an increase of 970 thousand tons from the previous month. Lump ore was 22 million tons, a month-on-month increase of 1.05 million tons; pellets were 8.75 million tons, a month-on-month decrease of 290,000 tons; fine powder was 7.99 million tons, a month-on-month increase of 250,000 tons.

3. In terms of spot, the PB powder in Rizhao Port is ¥943 to ¥945 per ton, and the Golden Bubba powder in Rizhao Port is equivalent to ¥995 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. For 01 iron ore, it is recommended to pay attention to the support at 810 and 750 when it continues to drop. As to arbitrage strategy, the 1-5 reverse cash and carry arbitrage strategy is recommended.

2. Option strategy: It is advised to short i2101-C-950.

PTA

The production and sales rebounded, and TA basis remains weak

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 fell by 240 or 1.92% and closed at 12,270. The main force contract of JRU02 rose by 0.7 or 0.39% and closed at 180.3. Yunnan WF closed at 11,600 to 11.750 yuan per ton, Hainan SCRWF closed at 11,650 to 11,800 yuan per ton, the secondary standard rubber closed at 10,600 to 10,700 per ton, and Thailand’s RSS3 closed at 15,300 to 15,400 yuan per ton.

NR: The main force contract of NR11 rose by 205 or 2.16% and closed at 9,270. The main force contract of TF12 rose by 0.1 or 0.07% closed at 137.2. The quoted price for Qingdao rubber in USD fell by $5 to $10 per ton. The CIF of STR20 in December was $1,460 to $1,465 per ton. The CIF of SMR20 was $1,400 to $1,410 per ton. The CIF of mixed rubber from Thailand in December was $1,430 to $1,435 per ton.

JRJ.com: Guizhou Tire disclosed a non-public share offering plan on September 4, the planned number of shares to be issued does not exceed 200 million shares (inclusive), and the total amount of funds raised does not exceed 1 billion yuan, all of which will be used in the project with an annual output of 1.2 million all-steel radial tires in Vietnam after deducting issuance costs. Among them, Guiyang Industrial and Commercial Investment plans to participate in the issuance subscription in cash, and the number of subscriptions shall not be less than 43.5% of the amount of the issuance. After the completion of the issuance, the cumulative shareholding ratio of Guiyang Industrial and Commercial Investment and its concert parties shall not exceed 30% .

Today is the birthday of the Malaysian head of state, and the local market is closed. The domestic supply in Hainan is normal, and the total latex is reported to be 10,700 yuan/ton, a discount of only 100 to 200 yuan/ton in terms of the concentrated latex. According to third-party statistics, the inventory trend in the domestic Qingdao Free Trade Zone remained unchanged. The inventory in the zone was destocked by approximately 2.6% on a week-on-week basis, and the inventory outside the zone increased by approximately 0.7% on a weekly basis.

Futures Operation Advice: For the main RU01 contract, it is advised to wait and see and focus on the recent low level at 12,390. (For reference only).