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Daily Market Review on Specified Futures Products 2020.10.09

Fang submitted 2020-10-09 15:19:18

Crude oil

Yesterday, oil prices rebounded to the highest point in the month. There are currently three main factors supporting the rise of oil prices: 1. Hurricane Delta hit the U.S. Gulf offshore oil production. As of yesterday, nearly 92% of the production capacity of approximately 1.7 million barrels per day has been closed; Norwegian oil workers' strike continues to ferment, and the strike time may be further extended (previously it was expected to mainly affect the output of about 100,000 barrels per day in the Oseberg and Ekofisk oil fields, and probably one less cargo per week); 3. The US fiscal stimulus bill has once again turned around. After Pelosi's phone call with Treasury Secretary Mnuchin, negotiations continued, and Trump still hopes to reach a comprehensive package agreement. However, in the future, we believe that the basis for rising oil prices is still not strong enough. The current core support point is still supply and macro sentiment. However, referring to history, whether it is a hurricane or a strike, the market usually has an impulsive impact. The current demand recovery is still weak, the price of refined oil has risen less than that of crude oil, and the development of the epidemic is still the sword of Damox for the rising oil market. Vaccines are unlikely to be available within the year. We believe the oil distribution will fluctuate at 40 to 45 dollar/barrel, and the continued rebound of oil prices requires cooperation from the demand side.

Strategy: Neutral and bearish relatively, reverse cash and carry arbitrage strategy on Brent, long the sixth lines and short the first line

Risk: Norway strikes longer than expected. Supply disruption caused by sudden geopolitical events. The dollar continues to depreciate sharply.

Iron Ore

Before the holiday, the position on I2101 contract closed at ¥809 per ton, the position on I2105 contract closed at ¥749.5 per ton.

Important Information

1. In China, Handan City issued an urgent notice of recent air quality strengthening control measures. To ensure the continuous improvement of air quality in our city, on the basis of implementing the "Handan City's October to December 2020 Key Industry Production Regulation Plan", the citywide implementation of strengthen management measures for particulate matter pollution, control period from the evening of October 7th to the morning of October 12th, 2020. Iron and steel companies have tightened production control with peak restriction. The sintering machines of Wu'an City, Yongnian District, Fengfeng Mining District, and Shexian Iron and Steel Enterprises implemented production control with peak restriction from 8 pm to 8 am the next day. On the basis of the existing production control measures in Handan Iron and Steel's West District, the sintering machine stopped production of another simple fan, and the chain grate rotary kiln was shut down for maintenance.

2. Ferrexpo released a quarterly report on October 6. The quarterly report showed that the company's iron ore pellet output in the third quarter was 2.537 million tons, a decrease of 11.7% from the previous quarter. In terms of varieties, 65% pellets was 2.537 million tons, a decrease of 10.9% month-on-month.

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

Trading Strategy

1. Arbitrage: The accumulation of iron ore port stocks before the holiday is relatively large. During the holiday, there is limited production policy in some areas of Hebei, but the actual impact is small. The steel mills mainly consume their own iron ore inventory. There will be a certain replenishment demand after the holiday. The spot is expected to be supported in the short term. In the long run, it is unlikely that molten iron production will continue to increase. The delivery level in Australia and Brazil is currently high. In the later stage, iron ore will continue to accumulate pressure. After the short-term replenishment demand is over, the spot price is expected to face pressure, and the market will rebound sharply before the holiday.

The basis is significantly narrowed, it is recommended to consider buying 01 coking coal and selling 01 iron ore.

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


Polyester production and sales increased during the second half of National Day, upstream PX rebounded with crude oil

Iin 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 accumulation 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: Before the holiday, the main force contract of RU01 fell by 275 or 2.18% and closed at 12,350. The main force contract of JRU03 rose by 8.1 or 4.40% and closed at 192.0. Yunnan WF closed at 11,800 to 12,050 yuan per ton, Hainan SCRWF closed at 12,000 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 200 or 2.09% and closed at 9,360. The main force contract of TF12 rose by 5.7 or 4.21% closed at 141.2. The market for Qingdao rubber in USD was scarce. The spot or CIF of STR20 was $1,480 to $1,490 per ton. The CIF of SIR20 in October was $1,410 to $1,415 per ton. The CIF of mixed rubber from Thailand in January was $1,430 per ton.

QinRex news: On September 23, the Rubber Authority of Thailand participated in online business negotiation and matching activities for rubber products and latex products, looking for new foreign importers, and increasing exports of domestic rubber products and latex products to the world market. The Rubber Authority of Thailand pointed out that a total of 17 countries and regions have participated in the negotiation of imported RSS3, rubber cup and latex. The amount of natural latex required is about 853,100 tons per year, and latex pillows and housekeeping latex gloves are the most popular.

As of September, the latest NINO 3.4 index closed at -0.6°C, a La Nina report. During the holidat, Thailand had a lot of rain. The average daily rainfall in early October was 11.12mm, but the 90-day cumulative rainfall year-on-year increase dropped from +45.3% last month to the current +33.8%. The climate data lacked speculation factors. Pre-holiday RU inventory futures closed at 212.6 thousand tons, and the de-stocking trend has stopped, and the week-on-week ratio was slightly accumulated by 400 tons.

Futures Operation Advice: The main RU01 contract is expected to rise and go strong following the rise of overseas market during the holiday. (For reference only).

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