[Audio version] Jinshi Futures Breakfast on July 12, 2024 (Friday)

Futures Morning Rush-Audio Version

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Macro News

1. Washington Post columnist David Ignatius wrote that after months of tough negotiations, the Biden administration seems to be on the verge of facilitating a ceasefire agreement between Palestine and Israel. A senior US official said that the framework of the ceasefire agreement has been agreed upon and the parties are now "negotiating the details of how to implement the framework."

2. The number of initial jobless claims in the United States fell more than expected last week, but this time of year, as automakers shut down factories for restructuring, it makes it more difficult to interpret the job market. The U.S. Labor Department said on Thursday that initial jobless claims fell by 17,000 to 222,000 in the week ending July 6, the lowest level since late May.

3. The U.S. unadjusted CPI annual rate in June was 3.0%, lower than the market expectation of 3.1%, and fell sharply to the lowest level since June last year. The seasonally adjusted CPI monthly rate in June was -0.1%, the first negative value since May 2020. After the release of the CPI data, traders expect that the Federal Reserve has a 25% chance of cutting interest rates by 25 basis points for the third time this year.

4. Chicago Fed President Goolsbee: The June inflation report was very good. Depending on the data, we can consider a rate cut or a series of rate cuts. San Francisco Fed President Mary Daly: Based on the data, it may be necessary to adjust monetary policy. A rate cut of 1/2 this year is appropriate. St. Louis Fed President Moussallem: Recent data show that inflation has made progress. I hope there will be data that will allow me to confidently predict that inflation will reach 2% by the middle or end of next year.

Global futures market changes

1. International oil prices rose across the board, with the August contract of U.S. crude up 0.9% to $82.84 per barrel, and the September contract of Brent crude up 0.49% to $85.50 per barrel.

2. International precious metal futures generally closed higher, with COMEX gold futures up 1.73% to $2,420.9 per ounce and COMEX silver futures up 2.29% to $31.725 per ounce.

3. Most of the base metals in London closed lower, with LME copper futures down 1.29% to $9,777.5/ton, LME zinc futures down 0.47% to $2,951.5/ton, LME nickel futures down 0.36% to $16,830/ton, LME aluminum futures down 0.36% to $2,474.5/ton, LME tin futures down 2.01% to $34,305/ton and LME lead futures up 0.8% to $2,197/ton.

4. The main agricultural futures contracts of the Chicago Board of Trade (CBOT) closed higher collectively, with soybean futures up 0.12% at 1068.25 cents per bushel; corn futures up 0.92% at 411 cents per bushel, and wheat futures up 1.74% at 571.25 cents per bushel.

5. Domestic commodity futures closed mixed in the night session, with energy and chemical products showing divergent performance, ethylene glycol up 1.22%. Black series rose and fell. Most agricultural products rose, with palm oil up nearly 1% and soybean oil up 0.79%. Most base metals closed down, with Shanghai tin down 1.38%, Shanghai copper down 1.09%, Shanghai zinc down 0.47%, Shanghai nickel down 0.23%, Shanghai aluminum down 0.22%, stainless steel down 0.07%, Shanghai lead up 0.39%, and alumina up 0.84%. Shanghai gold rose 0.98%, and Shanghai silver rose 1.13%.

Black hot news

1.Mysteel statistics show that the total inventory of imported sintering powder of 114 steel mills with new caliber is 27.0082 million tons, an increase of 708,900 tons compared with the previous period. The total daily consumption of imported sintering powder is 1.1596 million tons, an increase of 12,200 tons. The inventory consumption ratio is 23.29, an increase of 0.37. The total inventory of imported sintering powder of 64 steel mills with original caliber is 11.2856 million tons, an increase of 312,000 tons.

2. According to Mysteel, due to the impact of Nadam in Mongolia, loading at Chaganhada was suspended. On July 10, 610 vehicles passed through the Ganqimaodu Port, a decrease of 39.96% from the previous month, including 230 AGV vehicles. The port was officially closed from July 11.

3. According to the latest import and export commodity data from the General Administration of Vietnam Customs, Vietnam imported 6.365 million tons of coal in June, down 2.03% from the previous month and 12.35% from the same period last year. From January to June 2024, Vietnam's total coal imports were 33.446 million tons, up 36.75% year-on-year.

4. According to Mysteel, as of the week of July 11, rebar production and factory inventory decreased for the second consecutive week, social inventory turned from increasing to decreasing, and surface demand turned from decreasing to increasing. Among them, rebar production was 2.2722 million tons, a decrease of 95,300 tons from the previous week, and rebar surface demand was 2.3527 million tons, an increase of 4,900 tons from the previous week, an increase of 0.21%.

5. According to Mysteel, the bidding price of Hegang 75B ferrosilicon in July was 7050 yuan/ton, and the price in June was 7550 yuan/ton, which was 500 yuan/ton lower than the previous round. The bidding quantity of Hegang 75B ferrosilicon in July was 2629 tons, and the bidding quantity in June was 2200 tons, which was 429 tons higher than the previous round.

6. This week, Mysteel Coal and Coke Division investigated the profitability of 30 independent coking plants across the country. The national average profit per ton of coke was 35 yuan/ton; the average profit per ton of coke in Shanxi was 42 yuan/ton, the average profit per ton of coke in Shandong was 97 yuan/ton, the average profit per ton of coke in Inner Mongolia was -8 yuan/ton, and the average profit per ton of coke in Hebei was 93 yuan/ton.

Hot news on agricultural products

1. The Malaysian Palm Oil Council (MPOC) believes that palm oil exports to the EU will stabilize in the long run. Despite the challenges posed by the EU Deforestation Regulation (EUDR), the EU will remain an important market for Malaysian palm oil as MPOC believes that local exporters can meet the sustainability standards under the new rules.

2. Data released by the Solvent Extractors Association of India (SEA) on Thursday showed that the country's palm oil imports in June this year increased by about 3% month-on-month to 786,134 tons, the highest level since December last year. Soybean oil imports in June fell by about 15% month-on-month to 275,700 tons.

3. Data released by Brazilian shipping agency Williams showed that as of the week of July 10, the number of ships waiting to load sugar at Brazilian ports was 89, compared with 96 the week before. The amount of sugar waiting to be loaded at the ports was 3.9224 million tons, compared with 4.2263 million tons the week before. Of the total amount of sugar waiting to be exported that week, the amount of high-grade raw sugar (VHP) was 3.8369 million tons.

4. Data from the Southern Peninsula Palm Oil Pressers Association (SPPOMA) showed that from July 1 to 10, 2024, Malaysia's palm oil yield increased by 20.78%, oil extraction rate decreased by 0.12%, and output increased by 20.14%.

5. According to the July forecast data released by CONAB, the national commodity supply company under the Brazilian Ministry of Agriculture: Brazil's soybean production is expected to reach 147.3366 million tons in 2023/2024, a year-on-year decrease of 7.2729 million tons. Brazil's corn production is expected to be 115.859 million tons in 2023/2024, a year-on-year decrease of 16.034 million tons.

6. The latest USDA drought report shows that as of the week of July 9, about 8% of the soybean planting area in the United States was affected by drought, compared with 9% in the previous week and 57% in the same period last year. About 7% of the corn planting area in the United States was affected by drought, compared with 7% in the previous week and 64% in the same period last year.

7. Data from the U.S. Department of Agriculture showed that as of the week of July 4, 2024, U.S. net export sales of soybeans for 2023/2024 were 208,000 tons, in line with market expectations and up from 228,000 tons in the previous week; net sales of soybeans for 2024/2025 were 191,000 tons, up from 150,000 tons in the previous week.

8. The Brazilian Sugarcane Industry Association (Unica) said that in the second half of June, sugar production in central and southern Brazil reached 3.247 million tons, compared with 2.704 million tons in the same period last year. Sugarcane crushing was 48.806 million tons, compared with 43.194 million tons in the same period last year. Ethanol production was 1.419 billion liters, compared with 1.068 billion liters in the same period last year.

Energy and Chemical Industry Hot News

1. According to Longzhong Information, as of July 11, the total MEG port inventory in the main port area of ​​East China was 620,000 tons, a decrease of 24,200 tons from the previous statistical period; the total inventory of float glass sample enterprises nationwide was 63.583 million TEUs, a new high in three months, an increase of 1.102 million TEUs or 1.76% month-on-month; the weekly operating rate of domestic urea enterprises was 81.99%, a decrease of 0.63% month-on-month; the enterprise inventory was 249,000 tons, an increase of 18,000 tons month-on-month.

2. According to the National Development and Reform Commission, from 24:00 on July 11, 2024, the domestic gasoline and diesel prices will increase by 110 yuan and 105 yuan per ton respectively.

3. The IEA monthly report pointed out that the year-on-year growth of global oil demand slowed down to 710,000 barrels per day in the second quarter. The growth rate of oil demand will reach 970,000 barrels per day in 2024 (previously predicted to be 960,000 barrels per day). The growth rate of oil demand will reach 980,000 barrels per day in 2025 (previously predicted to be 1 million barrels per day). It is currently predicted that if the voluntary production cuts continue to be implemented, OPEC+ supply will decrease by 740,000 barrels per day in 2024.

4. According to Enterprise Singapore (ESG), Singapore's fuel oil inventories fell by 1.789 million barrels to a six-week low of 17.807 million barrels in the week ended July 10. Singapore's light distillate inventories fell by 2.202 million barrels to a 21-week low of 13.307 million barrels. Singapore's middle distillate inventories rose by 67,000 barrels to a two-week high of 8.454 million barrels.

5. The EIA natural gas report shows that as of the week ending July 5, total U.S. natural gas inventories were 3,199 billion cubic feet, an increase of 65 billion cubic feet from the previous week and 283 billion cubic feet from the same period last year, a year-on-year increase of 9.7%. At the same time, it was 504 billion cubic feet higher than the five-year average, an increase of 18.7%.

Metal Hot News

1. According to SMM, an alumina plant in Inner Mongolia with a production capacity of 500,000 tons has successfully produced finished products recently, and it is initially planned to start the second production line with an annual output of 500,000 tons in mid-August, when the total operating capacity will reach 1 million tons.

2. Australian mining giant BHP Billiton said on Thursday that it will temporarily suspend its Nickel West operations and West Musgrave project from October due to the plunge in metal prices and oversupply in the global market. The world's largest listed miner intends to reassess its decision to temporarily suspend nickel operations in Western Australia by February 2027.

3. Data released by the Indonesian Ministry of Trade showed that Indonesia's refined tin exports in June were 4,458.62 tons, down 44.20% year-on-year and up 35% month-on-month. At the beginning of the year, affected by the slow approval of Indonesia's tin ingot export quota, Indonesia's tin ingot exports were almost zero in January and February. With the resumption of export quota approval in March, the scale of tin ingot exports gradually increased. The increase in June was obvious compared with April and May, but there was still a large gap from the same period last year.

4. Trading company Marubeni Corp said that as of the end of June 2024, aluminum inventories in Japan's three major ports continued to rebound to 317,860 tons, up about 3% from the previous month. Specifically, inventories in Yokohama, Nagoya and Osaka have rebounded across the board.

5. Goldman Sachs analysts said that lithium prices are unlikely to have hit the bottom. They stressed that since mid-April, the price of each lithium auction has been lower than the previous one, and this price weakness is expected to continue until 2025. They said that in order to reduce the surplus in 2024 and the larger surplus in 2025, further lithium raw material supply rationing is still needed.

6. According to data from Statistics South Africa, South Africa's gold production in May fell 9.0% year-on-year, and gold production in April was revised down to a year-on-year decrease of 1.6% (previously a decrease of 1.7%).

Bragging about "futures" - revealing the logic of commodity trading!

1. In the context of supply disruption, will nickel prices rebound?

Xinhu Futures analysis pointed out that since this year, First Quantum, Glencore and other companies have started production suspension and maintenance of their high-cost nickel projects. Coupled with the suspension of BHP, it is expected to bring about a reduction of more than 100,000 tons. In addition, the approval progress of Indonesian nickel mines has been slow this year, and the supply of Indonesian nickel mines continues to be tight; the growth of Indonesian ferronickel and high matte nickel production has not been as expected. Global nickel supply and demand have narrowed significantly from the previous substantial surplus, and nickel price valuations are expected to rise significantly from the previous low. Although the current downstream demand for nickel is weak and the domestic macroeconomic sentiment is pessimistic, nickel prices are suppressed. However, nickel prices are already at a relatively low level. In the context of supply disruptions, we are paying attention to opportunities for a rebound in nickel prices.​

2. Methanol holdings have increased significantly, is this a trading expectation or reality?

Zijin Tianfeng Futures analysis pointed out that the main methanol contract rebounded after falling this week. With the rise in prices, the main contract positions also increased significantly. This week, the position of the 09 contract increased by more than 100,000 lots, and the attention of funds increased significantly. The main logic is that the market expects the increase in demand brought by the restart of the MTO unit, coupled with the price support brought by the low inventory in the mainland due to the excessive maintenance in the mainland and the good traditional demand. In the short term, the expectation of olefin restart is intensifying, which supports the disk price, but it should be noted that with the rebound of methanol prices, the recent MTO profit has been compressed again. It is necessary to pay attention to whether the restart of olefins will be lower than expected. Therefore, it is cautious to go long before the restart of the MTO unit.

Overview of recent important futures data and events

​1. At 10:00 on July 12, China released its June trade account data. Previous data showed that China's trade account was 586.4 billion yuan in May, higher than 513.45 billion yuan in April. Pay attention to whether the trade account can continue to rise and boost market sentiment.

2. July 12 to be determined, iron ore inventory in 45 ports in China as of July 11. The black series has fluctuated violently recently, and the black series market has become more sensitive to fundamental news. On July 5, the data was 149.8866 million tons, higher than the previous 149.2632 million tons, and most black series contracts had profit-taking. Pay attention to whether the data continues to rise in the future.

3. USDA July monthly supply and demand report at 00:00 on July 13. According to market news, the USDA supply and demand report for July is likely to adjust the yield to between 51.5 and 52 bushels per acre, and the beginning inventory for 2024/2025 is expected to be reduced to below 900 million bushels. The inventory is more of an expectation fulfillment. With the valuation of CBOT soybeans at a low level, the upward elasticity of prices is expected to be greater, that is, US soybeans are expected to rise more easily than fall.

The article is forwarded from: Jinshi Data