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Daily Market Review on Specified Futures Products 2020.09.22

Fang submitted 2020-09-22 11:22:11

Crude oil

The oil price plunged again yesterday. Generally speaking, it is a resonance of many factors. First of all, the expected resumption of production in Libya is the fuse of oil prices. With the current oversupply of crude oil in the Atlantic Basin, the resumption of production in Libya will further aggravate the oversupply of light oil. The contradiction has suppressed the discount of monthly spread and the spot price. However, Libya's production capacity will be restored to 1 million barrels per day at most. This part of the increase in OPEC can be balanced by reducing production. Therefore, we believe that it is not the main contradiction in the current market. The core issue of the market is still demand. Expectations for the second lockdown caused by the European epidemic have begun to increase. Some countries, such as Israel, have restarted their three-week lockdown from last Friday. Therefore, we see that refined oil prices are less than Crude oil has fallen, and the cracking spread has not improved due to the decline in crude oil. In addition, the collapse of European stocks and the rebound of the US dollar due to the European epidemic are also negative for oil prices on the macro level. We believe that unless OPEC can quickly respond to production cuts, oil prices will continue to fall back.

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 decreased by 9,013 lots and closed at ¥771.5 per ton, the position on I2105 contract increased by 4,278 lots and closed at ¥714.0 per ton.

Important Information

1. Bureau of Statistics: China’s iron ore ore output in August was 76.996 million tons, an increase of 5.4% month-on-month compared with July’s iron ore ore output, an increase of 3.6% year-on-year; from January to August, the total raw iron ore output was 56.2179 million tons, a cumulative 3.5% year-on-year increase.

2. As of September 18, Qingdao Port's PB powder import profit was 16.64 yuan/ton, a week-on-week increase of 21.14 yuan/ton; Qingdao Port card powder import profit was 44.29 yuan/ton, a weekly increase of 41.53 yuan/ton; Qingdao Port PB block import profit was 25.72 yuan/ton, a week-on-week increase of 26.01 yuan/ton.

3. Regarding the recent rumors of limited production of blast furnaces at Wu'an Steel Plant, it is understood that there are currently 3 new limited production blast furnaces, which are expected to affect the average daily molten iron output of 5,600 tons.

4. Mysteel: The sample port stock increased by 520,000 tons on Tuesday. Shipment volume in Australia decreased by 600,000 tons, and shipment volume in Brazil decreased by 1.7 million tons

5. In terms of spot, the PB powder in Rizhao Port was ¥915 per ton, golden bubba powder price was equivalent to ¥974 per ton.

Trading Strategy

1. Unilateral strategy: There was panic on the spot side yesterday, and the price dropped significantly. Spot prices are still high. The iron ore pressure on the port has gradually eased, and the port has accumulated a lot of warehouses. When the price of finished products drops, the motivation of steel mills to purchase raw materials is suppressed to a certain extent. The fundamentals of iron ore itself are not bad, but the contradiction is not obvious, and it is mainly affected by the production. The futures price will go first, and the later stage will focus on whether the finished product can stabilize. As for the unilateral strategy, it is advised to be bearish relatively for the time being and reduce some position.

2. Option strategy: It is advised to hold the short position on i2101-C-870.


PX's loss has deepened again, and polyester production and sales remain general

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, it is advised to focus on the reverse cash and carry strategy opportunity after the next round of TA overhauls fullfilling and rebound of 1-5 spread. 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 1.90% and closed at 12,375. It was the Aged Day in Japan, and the local market was closed. Yunnan WF closed at 10,800 to 10,900 yuan per ton, Hainan SCRWF closed at 11,950 and 12,000 yuan per ton, the secondary standard rubber closed at 10,650 to 10,700 per ton, and Thailand’s RSS3 closed at 15,750 to 16,100 yuan per ton.

NR: The main force contract of NR11 fell by 210 or 2.22% and closed at 9,245. The main force contract of TF12 fell by 0.8 or 0.57% closed at 139.1. The quoted price for Qingdao rubber in USD rose by $5 to $10 per ton with normal inquiries. The CIF of STR20 in December was $1,470 to $1,475 per ton. The spot price of CIF of SMR20 was $1,460 per ton. The CIF of mixed rubber from Thailand in January was $1,450 to $1,455 per ton.

Tire Business Network news: Recently, French Finance Minister Le Maire said that the government is looking for other feasible ways to avoid Bridgestone from closing its tire factory in northern France. Bridgestone said that under the pressure of sluggish tire demand, the company will begin to discuss the closure of the Bethune plant. The factory employs 863 workers. Due to the stricter epidemic lockdown measures implemented by the government in the first half of 2020, France has become one of the countries with the worst economic recession in Europe. Currently, the Macron government has launched an economic recovery plan of 100 billion euros (approximately 118 billion U.S. dollars), making employment issues a priority.

Today is the autumnal equinox in Japan, and the local market continues to be closed. In terms of synthetic rubber raw materials, the Fushun butadiene plant cancelled the maintenance plan, and the supply increased month-on-month. However, under the support of the downstream stocking before the festival, the market price was still strong. According to the third-party statistics of Qingdao Free Trade Zone inventory, the inventory within the zone increased by 0.3%, and the inventory outside the zone decreased by 1.0%, indicating the trend has been reversed.

Futures Operation Advice: For the main RU01 contract, it is advised to wait and see and pay attention to the pressure at the recent high level. (For reference only).

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