On March 16, most domestic commodity futures closed in the red. As of the afternoon close, black products led the gains, with iron ore rising nearly 4% and coking coal rising by nearly 4%. rose nearly 3%; energy and chemical products continued to be under pressure, with staple fiber falling by more than 4%, asphalt falling by more than 3%, EB, crude oil, fuel oil, PTA, etc. falling by more than 2%.
News Flash
1. According to Zhuochuang, Tangshan Steel Billet Changli Resources rose 50% this morning Yuan/ton, now 4,470 yuan/ton ex-factory including tax, Jinxi general billet has increased by 50 yuan/ton, now 4,540 yuan/ton ex-factory, including tax. At present, the prices of some steel companies have exceeded the high of 4,530 yuan/ton in 2011 and are at a new high since 2009.
2. According to foreign media reports, Shanghai Aluminum rose to the highest level in more than nine and a half years on Tuesday due to power outages and power outages ordered by Baotou City, Inner Mongolia, the main aluminum production area. Supply concerns in China, the largest consumer, have intensified after industrial shutdowns. Analysts at the UK Commodities Research Institute (CRU) said this could mean a reduction of 100,000 tons of annual aluminum production.
3. Due to the delay in the arrival of Brazilian soybeans, domestic soybean arrivals in March were small, expected to be around 6.2 million tons, and short-term soybean stocks will continue to decline; As soybean arrivals increase in April, inventories will resume rising. Domestic soybean crushing volume fell back to 1.45 million tons last week, and soybean meal output decreased. As feed farming companies depleted their early stocks, the delivery speed has accelerated recently, and soybean meal stocks have declined.
4. In the spot market of red dates, the market conditions in the sales area are stable and the prices do not fluctuate much. The volume of goods taken by the merchants in the market is not large. They buy and sell as they go. Discuss price based on quality. However, the consumption of red dates has gradually entered the off-season, and after May, red dates must be stored in cold storage, causing some concern in the market.
Analysis of key varieties
Crude oil
Previously, a well-known overseas investment bank had raised the target price of crude oil to US$100. In fact, the possibility of oil prices regaining US$100 is almost zero. From China’s perspective, under the policy background of carbon neutrality and carbon peaking, clean energy is the future trend. Looking around the world, the supply of equipment and transportation powered by gasoline and diesel will also gradually decrease. Currently, crude oil is the only one that cannot be separated. The only possibility is chemical products. With the popularization of new materials, the dependence of chemical products on crude oil will gradually decrease. Therefore, looking at the long-term period, the demand for crude oil must be shrinking.
In fact, crude oil prices have always been a “one-man show” on the supply side, which can also be said to be a game of supply manipulation. For a long time, supply has been significantly greater than demand. The sharp rise and fall in crude oil since last year are the result of the mismatch between supply and demand, not that there is really a problem with supply. Crude oil has been able to rise smoothly during this period, mainly due to the joint production cuts by OPEC and OPEC+. But this does not seem to last long. Oil-producing countries have been coveting high oil prices for a long time, and no one is sincere in reducing production. When OPEC and OPEC+ met, they both supported production cuts, but in fact they both wanted to increase production. This is because we have to compromise because we take into account the outside world’s expectations for oil prices and the intricate relationships between countries.
From a recent incident, we can see the clues that oil-producing countries have their own agenda. According to media reports, oil writer Julian Lee recently wrote an article saying that the emergence of OPEC There is a small crack, but this crack may continue to expand. The UAE recently allowed its primary buyers to trade crude oil freely on the open market. Veteran crude oil analyst Philip K. Verleger said the UAE’s move could ultimately weaken OPEC and the OPEC+ production reduction alliance.
Although the UAE has not explicitly stated that it will increase production, doing so can greatly improve the flexibility of buying and selling and expand the potential buyer base. Neighboring countries, the attractiveness of UAE crude oil will also be greatly enhanced. Oil policy is just one area of disagreement between the UAE and OPEC countries. The UAE has reduced its involvement in the conflict in Yemen, dissatisfied with Saudi Arabia, which had previously unilaterally suspended cargo shipments with Qatar but forced the UAE to follow suit.
The weak OPEC and OPEC+ production reduction alliance will eventually lead to crude oil seizing share and triggering a price war, and oil prices will return to a downward trend. However, the above analysis is all from a long-term perspective. Although crude oil has failed to rise in the short-term, judging from the restless market sentiment, oil prices still have a chance to reach the top again. In the short-term, buy on dips, lower profit expectations, and wait for crude oil to peak again.
Live pigs
The national weekly average price of three-yuan pigs in the second week of March was 28.46 yuan/kg, down 2.3% compared to last week, and down 22.1% compared to the same period in 2020.
First, the lack of favorable factors has led to the continued decline in pig prices. At present, the problem of pig disease is still one of the factors that has the greatest impact on the market. The problem of pig disease does not refer to the death of pigs, but the psychological impact on farmers. In order to avoid risks, many farms continue to sell small-weight pigs for slaughter. After the price of pigs fell, large-weight fat pigs that were pressed into slaughter in local areas also began to be sold one after another. Second, there is the issue of consumption. We are currently in the off-season for consumption, with weak terminal demand, slow shipments in the wholesale market, losses for slaughterhouses, and increased willingness to lower prices. The reason for the short-term local rise this week is mainly due to the tightening of transportation policies in various regions. Retail investors in some areas resisted low prices and showed a price-bearing sentiment. Based on the recent main influencing factors, it is expected that the pig market will rise in the next week.�The main trend will still be a decline. In the second half of the year, with the completion of the large-scale market selling plan, coupled with the market’s sentiment of holding on to prices and hoping for an increase, it may lead to a rebound in prices.
Soda ash
The domestic float glass spot market continues its upward trend, with midstream and downstream companies entering the market The enthusiasm is acceptable. However, at present, the Shahe production enterprises in North China are generally delivering better goods, and their inventories have been significantly reduced; although the production and sales of enterprises in East China have slowed down slightly, the inventories of all enterprises are lower than the same period, and the mentality of the industry is optimistic; some downstream replenishment in South China has entered the final stage. Shipments have slowed down overall; inventories of enterprises in Central China are low, and the market mentality is positive.
The trend of glass is improving, supporting the price of soda ash. From the perspective of soda ash production, some maintenance equipment has been restored recently. The increase in soda ash prices has improved corporate profits, increased overall willingness to start operations, and delayed maintenance of some companies. With the rapid rise in prices and the increase in the inventory of raw materials in glass factories, some downstream factories have weakened their willingness to replenish their inventories and remain cautious about the market. However, the purchasing sentiment of low-inventory companies is still high. The high daily melting volume brought about by the high profits of float glass and the expected start-up of photovoltaic glass this year have boosted the mid- to long-term demand for soda ash, stimulating traders’ willingness to stock up. The recent continued increase in the ex-factory price of soda ash companies has also boosted futures prices.
Key events to pay attention to
1. 20:30 US retail sales and import prices in February Index monthly rate
2, 21:15 US industrial output monthly rate in February
3. 22:00 US January commercial inventory monthly rate
4. 22:00 US March NAHB housing market index
5. API crude oil inventories in the United States for the week to March 12 at 04:30 the next day
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