Crude oil

On September 25, the Shandong Taxation Bureau announced that it would levy a risk reserve fund from local refineries. This reserve is a windfall profit tax levied on refineries after the oil price is lower than 40 US dollars per barrel. However, due to the previous submission of the main business but the private refinery has not yet submitted it, it once caused the market to complain about this policy. The current Shandong tax issuance of relevant documents is equivalent to a retrospective of the second quarter. Although we don’t know how the final implementation will be, but to a certain extent The profit of the Shandong refinery will be suppressed, and it will have an impact on the company's cash flow and operating rate. Superimposed on the current high domestic refined oil inventory, we expect the refinery's production and operation pressure will further increase.

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 8,049 lots and closed at ¥769.5 per ton, the position on I2105 contract increased by 753 lots and closed at ¥712 per ton.

【Important Information】

1. According to China Iron and Steel Association, from January to August 2020, the China Iron and Steel Association’s key statistics steel companies achieved sales revenue of 2.9 trillion yuan, a year-on-year increase of 5.8%; realized profits of 109.64 billion yuan, a year-on-year decrease of 18.6%, and the decline narrowed by 10 percentage points compared to January to July; the sales profit rate was 3.79%, an increase of 0.27 percentage points from January to July, and a decrease of 1.13 percentage points from the same period last year.

2. On the evening of September 28, the 1580mm hot-rolling production line of Panhua Group's Chongqing Fuling Base successfully rolled hot coils at one time. It is understood that the 1580mm intelligent hot-rolling production line, which was successful in this trial rolling, is designed to produce 4 million tons of hot-rolled steel coils of various specifications, with an output value of 16 billion yuan.

3. In terms of spot, the PB powder in Rizhao Port was ¥880 per ton, golden bubba powder price was equivalent to ¥953 per ton.

【Trading Strategy】

1. Arbitrage: This week, shipments from Brazil returned to a high level, and shipments from Australia also increased. The overall shipments were at a relatively high level. With the secondary epidemic in Europe, the diversion of iron ore is expected to weaken, and the overall supply pressure is expected to remain high. The demand side of pig iron has fallen from a high level recently. Under destocking time constraints, there is pressure on pig iron output at the end of the year. Iron ore is expected to accumulate in the overall inventory, but the basis of the 01 contract is already large. It is recommended to lighten up the short position. The iron ore 1-5 reverse cash and carry arbitrage strategy is advised to lighten up and pay attention to support at recent lows.

2. Option strategy: It is advised to short i2101-C-870.

PTA

PTA: Hainan Refining & Chemical PX heats up to produce, TA still has not seen centralized inspection and repair

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 all the overhauls are fulfilled, the inventory will continue to decrease, and it is advised to focus on the overhauls development. There is an expectation of rigid accumulationIn in November and December. 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 60 or 0.47% and closed at 12,615. The main force contract of JRU02 rose by 2.6 or 1.39% and closed at 189.6. Yunnan WF closed at 11,850 to 12,100 yuan per ton, Hainan SCRWF closed at 12,050 and 12,200 yuan per ton, the secondary standard rubber closed at 10,700 to 10,800 per ton, and Thailand’s RSS3 closed at 15,900 to 16,200 yuan per ton.

NR: The main force contract of NR12 fell by 115 or 1.18% and closed at 9,590. The main force contract of TF12 rose by 0.5 or 0.36% closed at 139.8. The quoted price for Qingdao rubber in USD rose by $5 to $10 per ton. The spot or CIF of STR20 was $1,490 to $1,500 per ton. The spot price or CIF of SIR20 in October was $1,410 to $1,415 per ton. The CIF of mixed rubber from Thailand in January was $1,450 to $1,460 per ton.

Quoting from the Dongying Municipal Bureau of Commerce: From January to August, Dongying City completed 81.29 billion yuan in imports and exports, a year-on-year decrease of 22.6%. Among them, the export of rubber tires was 10.54 billion yuan, down 21.2%. Imports of natural rubber amounted to 540 million yuan, an increase of 10.3%. With the gradual recovery of economic activities in some foreign countries, with the advantages of sufficient output and high cost performance, Chinese tires have rapidly recovered their export orders, and the overall performance has been relatively good.

The domestic latex price in Hainan continues to rise, and the purchase price is guided at 11,100 yuan/ton, a premuum of 0-600 yuan/ton in terms of Hainan latex, but the actual purchase price is heard to be 12,100 to 12,200 yuan/ton. Terminal tire dealers indicated that their shipment performance this month was acceptable, with more sales volume increasing month-on-month. As the double festival is approaching, the margin has been increased, and need to be cautious.

Futures Operation Advice: The main RU01 contract is at high level, it is advised to stop profit for long position. (For reference only).