Price trend of spot precious metals

According to the data of business news agency, on December 31, the average price of silver in the morning market was 5550 yuan / kg, up 17.71% from the average price of 4715 yuan / kg in the spot market at the beginning of the month (December 1), 26.82% from the spot price of 4376.33 yuan / kg at the beginning of the year (01.01), 88.60% from the trough price of 2942.67 yuan / kg in the year (3.19), and 88.60% from the peak price of (8.11) in the year The spot price of silver was 6708.33 yuan / kg, down 17.27%.

The spot price of gold was (342.71%) yuan higher than the spot price at the beginning of the year, and the spot price of gold was (341.34%) yuan higher than the spot price at the beginning of the year.

Price index of precious metals

On December 31, the silver commodity index was 63.30, up 0.83 points from yesterday, down 38.40% from 102.76 points (2011-09-06), the highest point in the cycle, and up 88.62% from 33.56 points, the lowest point on March 19, 2020. (Note: period refers to the period from September 1, 2011 to now)

On December 31, the gold commodity index was 104.33, up 0.37 points from yesterday, down 12.34% from 119.02 points (2020-08-09), the highest point in the cycle, and up 80.88% from 57.68 points, the lowest point on August 2, 2015. (Note: period refers to the period from September 1, 2011 to now)

In December, the precious metal market was uncertain

In December, the price of precious metals stopped falling and rose, among which the price of silver rose by 17.71% and the price of gold rose by 5.36%.

The price rise in the early stage was mainly due to the deterioration of vaccine effect in overseas epidemic news (especially the mutation of the British virus strain), the short-term failure of market optimism, and Trump’s signing of the epidemic stimulus and poverty relief act, as well as the endless emergence of easing policies by central banks.

At present, the price platform is volatile, and the uncertainty of the future market is strengthened.

Recent news:

The leaders of China and the EU jointly announced the completion of the China EU investment agreement negotiations on schedule;

Michelle Michel, President of the European Council, Frederick von draen, President of the European Commission and British Prime Minister Johnson all signed the agreement on Trade and cooperation between Britain and Europe one after another. After signing, the agreement will be implemented on January 1, 2021;

As tax incentives and epidemic driven demand for big houses continue to boost demand, UK house prices rose faster than expected in December, the biggest annual increase in six years. According to the data, the UK nationwide house price index rose 0.8% month on month in December, expected to rise 0.4% and the previous value rose 0.9%; it rose 7.3% year on year, expected to rise 6.7% and the previous value rose 6.5%;

Us wholesale inventories in November decreased by 0.1% on a month on month basis, expected to increase by 0.6% and the previous value increased by 1.1%.

According to the monitoring of business news agency, the price trend of domestic anhydrous hydrofluoric acid rose slightly this week. By the end of the week, the market price of hydrofluoric acid was 9530 yuan / ton, up 0.63% from 9470 yuan / ton at the beginning of the week, and down 6.93% year on year.

Recently, the price trend of domestic hydrofluoric acid continues to rise. Up to now, the mainstream price of domestic hydrofluoric acid in various regions is 9300-9800 yuan / ton. The domestic hydrofluoric acid trading market is mainly rising. Recently, the domestic hydrofluoric acid spot supply is slightly tight, and the floor price continues to rise.

First of all, the market price trend of fluorite, the raw material of hydrofluoric acid, was temporarily stable. As of the end of the week, the domestic fluorite price was 2718.89 yuan / ton, which was flat this week. Recently, the domestic fluorite spot supply was tight. As the temperature dropped, some manufacturers in the North stopped their plants, the supply in the yard was slightly tight, and the domestic fluorite price trend was temporarily stable. By the end of the weekend, the mainstream of domestic fluorite negotiations was 2600-2800 yuan / ton. The high price of fluorite on the floor was supported by the cost of hydrofluoric acid market, and the domestic market price of hydrofluoric acid rose due to the positive support.

The domestic refrigerant market rose slightly this week. Recently, the automobile industry’s sales market is general, and the refrigerant market has improved. The demand is mainly based on demand. The refrigerant industry’s trend has risen, and the market of various types of refrigerants has risen slightly. However, the manufacturer’s shipment is under pressure, the sales pressure is large, the increase of raw material hydrofluoric acid is limited, and the support force is general. The refrigerant export volume has little change, and the price is low The output of air conditioner is low, the demand is scarce, the off-season effect of after-sales market continues, and the price of refrigerant increases little. As a whole, the refrigerant market is generally supported by favorable factors, the price will remain low or become normal, and the focus of transaction will remain low. At present, the load of R22 manufacturers is not high, the inventory is in a reasonable range, and the market price remains at a low level. However, the downstream receiving capacity is limited, there is a lot of wait-and-see sentiment, the delivery of goods is not smooth, and the actual transaction focus rises slightly. Some businesses still have the phenomenon of cost inversion. The mainstream of on-site negotiations is 13500-15500 yuan / ton. The market trend of domestic R134a rose slightly, but the auto industry continued to be depressed, and the transaction atmosphere was light. The supply of goods on the floor is sufficient, and the market will be affected by new production capacity in the future. The competition is fierce, and the supply side is gradually bad. The price is slightly higher, but the downstream demand is not significantly improved, and the price trend of hydrofluoric acid market is slightly higher.

Third: the domestic spot supply of hydrofluoric acid is slightly tight. Some hydrofluoric acid plants are overhauled in the hydrofluoric acid yard, and the market price of hydrofluoric acid rises slightly. So far, the mainstream of hydrofluoric acid negotiation in the southern region is 9500-10000 yuan / ton, and the price of hydrofluoric acid in the northern market is 9300-9800 yuan / ton. Recently, the price trend of domestic hydrofluoric acid market is mainly rising, and the manufacturers reflect that they are bullish in the near future, and the price of hydrofluoric acid Market in the later period has a greater driving force.

In general, due to the high price of raw material fluorite, the price of downstream refrigerants rose slightly. In addition, due to the recent overhaul of some domestic hydrofluoric acid plants, the spot supply on the site was slightly tight. Chen Ling, hydrofluoric acid analyst of business society, believes that the market price of hydrofluoric acid may continue to rise slightly.

Gold price increased by 14.64% and 33.94% during the year

According to the tracking data of business news agency, as of December 31, the spot price of gold was 392.70 yuan / g, an annual increase of 14.64% compared with 342.54 yuan / g at the beginning of the year (01.01), an increase of 18.39% compared with 331.75 yuan / g at the trough of the year (3.19), and a decrease of 12.34% compared with 448 yuan / g at the peak of the year (8.7).

In 2020, the spot gold price will increase by 14.64% in the year, and the amplitude will be as high as 33.94% in the year (the above data are calculated based on the price at the beginning of the year). The monthly price of spot gold in 2020 is as follows:

During the year, the trend of gold price generally showed a trend of first rising, then falling, and then rising in the last month. The downward correction bands were concentrated in the first ten days of March, the middle ten days of August, the middle and last ten days of September, and November; The downward adjustment in March was mainly based on the general decline of assets under the pressure of US dollar liquidity under the influence of the epidemic news, followed by the influx of various funds to hedge against risks, the surge of gold investment demand, and the surge of gold ETF positions. On August 7, the gold price reached an all-time high of nearly 450 yuan / g, and the early profit taking funds began to take profits. In addition, the vaccine news, the US stimulus fiscal deadlock and other factors In December, affected by the news of the new virus strain in the UK, the optimistic expectation of vaccine was greatly reduced, and the risk aversion began to pick up again. (see figure below)

Five years of upward channel to a new record

Looking at the historical price data of gold in the past 10 years, the current gold price is at a cyclical low. Since August 2, 2015, the upward channel, especially since May 2019, the gold price has entered a fast rising channel, with the price rising from 280.55 yuan / g to 392.70 yuan / g, an increase of 39.98% (taking the gold price on May 1, 2019 as the benchmark price).

At present, the gold price is 217.10 yuan / g, an increase of 80.88% compared with the low in recent 10 years; the high in this year is 448 yuan / g, an increase of 106.36% compared with the low in recent 10 years.

According to the commodity index analysis system of business community, the gold commodity index on December 31 was 104.33, down 12.34% from the highest point of 119.02 points (2020-08-07) in the cycle, and up 80.88% from the lowest point of 57.68 points on August 2, 2015. (Note: period refers to the period from September 1, 2011 to now)

To lengthen the cycle, according to the Comex gold futures price data, after the last peak fall, the gold price has entered the upward channel in the past five years, and reached a historical high again in August 2020. At present, the price is still relatively high in history.

The supply reduction in 2020 is mainly reflected in the second quarter

In 2017-2020, the global gold quarterly supply is between 1028-1265 tons; the annual supply is generally increasing in 2017-2019; in the second quarter of 2020, affected by the epidemic situation, the global quarterly supply is down 15.5% year on year; in the third quarter of 2020, the global quarterly supply is down 3.3% year on year. In the first three quarters of 2020, the global gold supply decreased by 195.24 tons compared with the same period last year, of which 188.67 tons decreased in the second quarter compared with the same period last year.

Investment demand leading price trend in 2020

According to the data of the world gold association, the total global demand for gold in the first half of 2020 was 2076 tons, a year-on-year decrease of 6%. Among them, the demand for gold bars and gold coins was 397 tons, a year-on-year decrease of 17%; the global demand for gold ornaments was 572 tons, a year-on-year decrease of 46%; the demand for science and technology gold was 140 tons, a year-on-year decrease of 13%; the net purchase volume of central banks was 233 tons, a year-on-year decrease of 39%; the increment of gold ETF was 734 tons.

In the third quarter, the demand for gold bars and gold coins, which are relative to investment demand, increased sharply with the rapid rise of gold price in the early stage. With the help of profit-making effect, the retail investment demand for physical gold in other markets except Thailand increased sharply. The demand for gold bars and gold coins in the third quarter was 222.1 tons, up 49% year-on-year. The gold ETF, which is also an investment demand, increased significantly in the third quarter due to the late price correction The growth rate slowed down to 272.5 tons in the quarter. It was not until November in the fourth quarter that the global total position declined for the first time in the year. The position decreased by 107 tons, and the increment of gold ETF decreased to 916 tons from 1022 tons in the previous October, still setting an annual inflow record. The previous highest annual inflow was 646 tons in 2009.

In the third quarter, physical consumer demand remained weak, with gold jewelry demand of 333 tons, a year-on-year decrease of 29%; science and technology gold demand of 76.7 tons, a year-on-year decrease of 6%; affected by the reduction of 45.5 tons of gold held by the Turkish central bank in September, the global central bank’s gold demand showed a small net sale of 12.1 tons in the third quarter of 2020, which was the first net sale since the fourth quarter of 2010.

In the first three quarters, the total global gold demand was 2968.2 tons, of which investment demand accounted for 62% and consumption demand 38%. The increment of gold ETF surpasses the consumption demand of gold ornaments and ranks first in the demand list. (see the figure below for demand data and proportion in the first three quarters of 2020)

It can be seen that in 2020, the factors of supply and demand of gold physical consumption with commodity attributes have extremely weak influence on the trend of gold price, and the factors of investment demand with monetary / financial attributes based on anti inflation and risk aversion completely dominate the trend of gold price.

The underlying logic of gold price rising under the guidance of financial attributes in 2020

Global money supply easing is expected to be strengthened in 2020. The development of the novel coronavirus pneumonia has been shrinking global economic activities. To slow down the economic downturn and curb the recession, the supply of money in the world’s major economies is relatively abundant, and the liquidity is released on a large scale to prevent liquidity crisis and financial crisis. Monetary supply is looser than expected, monetary demand is stronger than expected. As an investment product to hedge inflation, gold is easily favored by capital.

The downward trend of interest rates of central banks is expected to be confirmed in 2020, especially the US dollar interest rate. In 2020, the real interest rate of US dollar will turn negative due to inflation and the decline of nominal interest rate. Under the influence of the continuous expansion of the Federal Reserve’s balance sheet and the relative flooding of US dollar liquidity, the US dollar devalued and weakened.

In a general logical sense, the depreciation of the US dollar means that when the product gold is priced in US dollars, more gold can be purchased when it is purchased in other currencies, which stimulates the supply and demand of international gold and increases the demand for gold, thus pushing the price up. The depreciation of the US dollar indicates that the market’s confidence in the US dollar is weakened, and the holding of the US dollar is reduced, and the holding of gold is increased, which leads to the rise of the price of gold.

As an interest free hedging investment product, gold has a prominent investment value when the interest rate goes down, especially when the real interest rate is negative.

Based on the above factors, the market expectations are highly consistent, the market leverage trading superimposes speculation, and the investment demand for Gold surges.

Some reasons for the operation of gold price in 2021

Logic layer:

The global economy is expected to be better in 2021. The OECD predicted in November that the global economy will grow by 4.2% in 2021 and shrink by 4.2% in 2020. The last time the OECD released its quarterly forecast was in September, when it expected the economy to grow by 5% in 2021. (the comparison of the two forecasts for major economies is shown in the figure below)

Inflation expectations in 2021 may decline over time. As the only country with positive annual GDP growth in major economies in 2020, China’s monetary policy is gradually returning to normalization. The monetary policy committee of the people’s Bank of China pointed out at its regular meeting in the fourth quarter of 2020 (the 91st session in total), that a prudent monetary policy should be flexible, accurate, reasonable and moderate, maintain the continuity, stability and sustainability of monetary policy, grasp the time effect of the policy, and maintain the necessary support for economic recovery. We should comprehensively use and innovate a variety of monetary policy tools, maintain reasonable and sufficient liquidity, keep the growth rate of money supply and social financing scale basically matched with the economic growth rate, and keep the macro leverage ratio basically stable. Domestic CPI data shows that China’s inflation pressure is not big at present, and it is expected that the later monetary policy will focus on “drip irrigation”.

The depreciation of the US dollar has a bottom, and the US Federal Reserve has a large operating space in terms of interest rates. Recently, the United States launched the second round of fiscal stimulus plan (bail-out plan), which emphasized the purchase and distribution of new crown vaccines. The success of vaccine R & D and promotion will effectively alleviate the continuous downward trend of the economy. In 2021, the financial stimulus of the United States will gradually decline.

Capital level:

When the epidemic subsides and the economy recovers, risk aversion will gradually subside, capital risk preference will rise, and the scale of holding gold will decline with the investment enthusiasm of other competitive products. At present, the price of gold is at a relatively high level in history, and the risk of being bullish continues to accumulate over time. Therefore, ye Jianjun, an analyst of business news agency, believes that in 2021, the trend of gold price is generally in a “^” type, with narrow upward space. The operating range is 350-430 yuan / g, and the operating range of international gold price is 1660-2050 US dollars

Price list of aluminum ingots

According to the data of business news agency, on December 30, the average price of domestic aluminum ingots in East China market was 15786.67 yuan / ton, down 7.12% from the average price of 16996.67 yuan / ton at the beginning of the month (December 1), up 8.47% from the average price of 14553.33 yuan / ton at the beginning of the year (January 1), and up 40.49% from the valley price of 11230 yuan / ton at the end of the year (March 24).

Summary of Fundamentals:

1. Aluminum ingot destocking remained significant in December

According to statistics, as of December 24, the domestic electrolytic aluminum social inventory totaled 58.6 tons, 3000 tons less than last week, 29000 tons less than 615000 tons on November 19, 719000 tons less than October 16, and 133000 tons less than last week.

2. The import volume of aluminum ingots increased

According to the data released by the General Administration of customs, China imported 188973 tons of unwrought aluminum and aluminum products in November, down 26.4% from October and up 158.6% from the same period last year.

In addition, it is estimated that more than 100000 tons of electrolytic aluminum will be imported in December, the import volume in January may also exceed 80000 tons, and the overseas import contract volume in December may flow into China from January to February.

According to the exact data we have learned, 2.44 million tons of unwrought aluminum and aluminum products will be imported in November 2020, a fourfold increase over the same period of last year. China’s annual aluminum import in 2020 has reached a record high.

3. Policy news

On December 21, 2020, the European Commission announced that it would conduct an anti circumvention investigation on aluminum foil in rolls originating in China. In the filing notice, the European Commission pointed out that the Commission has sufficient evidence to prove that the re export of the products originated in China through Thailand (whether or not it is indicated that they originated in Thailand) has evaded the current anti-dumping measures against China’s rolled aluminum foil. The EU CN codes of the products involved are ex7607 11 11 and ex 7607 19 10 (Taric codes are 7607111111 and 7607191011).

Basic outlook

At present, the domestic aluminum ingot consumption is good, the social inventory continues to move down, and the supply and demand factors support the strong operation of aluminum price. With the upside down of the internal and external market, the import aluminum ingot volume increases, flattening the increase to a certain extent. Near the end of the year, the foreign investment gold plate in the industry gradually withdraws, and the downstream consumption is expected to weaken on the eve of the Spring Festival The profit is roughly estimated to be 3000-5000 yuan / ton, and the fluctuation can be operated in a large space. The future market operation is mainly cautious. However, the situation of low inventory will be strongly supported at the bottom of the price, and there is a large probability of cross trading in the near future.

This week’s (12.20-12.25) LPG market rose first and then fell. According to the data monitoring of business society, the average price of LPG in Shandong civil market was 3510.00 yuan / ton on December 20 and 3500.00 yuan / ton on December 25, with a decrease of 0.28% during the period and an increase of 10.53% compared with December 1.

As of December 25, the mainstream prices of LPG in various regions of China are as follows:

Specification ﹣ mode of transportation ﹣ region ﹣ mainstream transaction price

Civil gas and automobile transportation in North China: 3610-3780 yuan / ton

Civil gas and automobile transportation in East China: RMB 3860-3910 / T

Civil gas and automobile transportation in South China: RMB 4000-4200 / T

Civil gas and automobile transportation in Shandong Province: 3550-3600 yuan / ton

Civil gas and automobile transportation in Northeast China: 3550-3800 yuan / ton

Civil gas and automobile transportation: 3950-4180 yuan / ton

This week, the trend of LPG civil market was mainly volatile, and the overall trend was still greatly affected by international crude oil, with a magnitude of 2.33%. At the beginning of the week, Shandong’s civil gas rose for two consecutive days, while international crude oil rose. The news was favorable to the market mentality, and the manufacturers raised the ex factory prices one after another. The downstream companies had a good enthusiasm to enter the market, and the market transaction atmosphere was mild. However, with the price rising to a relatively high level, the downstream’s acceptance capacity is limited, and with the decline of international crude oil, the market mentality is suppressed, the downstream’s resistance is increased, and the enthusiasm for entering the market is weakened, so we should be more cautious and wait-and-see. Manufacturers shipping blocked, inventory gradually increased, forced to reduce the ex factory price, stimulate the downstream market.

This week, the LPG futures market fell mainly due to shock, with limited positive effect on the spot market. On December 25, the opening price of LPG futures contract 2102 was 3950, the highest price was 3974, the lowest price was 3881, the closing price was 3960, the former settlement price was 3918, the settlement price was 3933, up 42, or 1.07%, the trading volume was 70741, the position was 41319, and the daily increase was 624. (quotation unit: yuan / ton)

At present, the positive support of the market is not obvious, and the weak international crude oil market is limited. However, due to the cold weather in winter, there is a rigid demand in the downstream. And near the end of the year, new year’s Day is coming, there is still replenishment demand in the downstream before the festival, CP is expected to rise in January, and the price is expected to remain strong in the short term.

In the last ten days of December, the overall propane market fluctuated and rose. In the second half of the month, the market fluctuated more frequently, with prices rising first and then falling. According to the data monitoring of business news agency, the average price of propane market was 3835.00 yuan / ton on December 14 and 4007.50 yuan / ton on December 25, with an increase of 4.50% in the second half of the month, up 4.43% compared with December 1.

As of December 25, the mainstream propane prices in different regions of China are as follows:

Dec. 15, 2005

Propane in East China,% (V / V) not less than: 95 4150-4200 yuan / ton

In North China,% (V / V) is not less than 95.4000-4100 yuan / ton

In Shandong Province,% (V / V) propane is not less than 95 3780-4050 yuan / ton

In South China,% (V / V) is not less than 95.4300-4830 yuan / ton

In the second half of the month, propane market trend can be divided into two parts. From December 15 to 22, propane market rose rapidly. During the period, the port price was relatively strong, the international crude oil fluctuated upward, and the news was favorable to the market mentality. Due to the low market price in the early stage, the market rose when it was good. The mentality of the downstream gradually improved, the enthusiasm for entering the market increased, the manufacturer’s shipment situation was good, the inventory level was relatively low, the mentality was relatively strong, and the price continued to push up. However, the rising market did not continue. On the 23rd, there was a correction in the price, but the extent was not large. As the international crude oil continued to fall, the market mentality was depressed. With the end of replenishment in the market, the lower reaches mostly withdrew from the market and turned to wait-and-see, the market transaction scope obviously weakened, and the price dropped.

In terms of international market, Saudi Aramco announced in December that there was an increase in propane and butane. Propane was US $450 / T, up by US $20 / T from last month; butane was US $460 / T, up by US $20 / T from last month. CP rose in December, which brought good news to the market.

At present, the price of CP is expected to rise in January, which is good for the market mentality. In winter, it is still in the peak demand season, and the downstream stage replenishment is the main. However, the weak trend of international crude oil affects the market mentality. Towards the end of the year, propane market is expected to stabilize first and then rise in the short term.

1、 Price trend

According to the price monitoring of the business association, on December 28, the average price of salicylic acid (industrial grade) mainstream manufacturers was 13933 yuan / ton, up 0.72% from the beginning of the month, up 3.21% from the beginning of the month, and down 9.13% from the beginning of the year.

2、 Market analysis

In December, salicylic acid market rose slightly, enterprises generally rose, and the market was good. At the same time, new production capacity entered the market. This month, due to good demand, manufacturers were in short supply, orders increased, and the demand for export and domestic sales increased significantly. Some enterprises said that during this period, export and domestic sales were half and shipment was smooth. According to the monitoring data of the business community, as of December 28, the quotations of salicylic acid industrial enterprises were mostly in the range of 11000-15000 yuan / ton, the quotations of pharmaceutical grade enterprises were mostly in the range of 23000-25500 yuan / ton, and the quotations of sublimation grade enterprises were mostly in the range of 15000-20000 yuan / ton.

Phenol as raw material, the domestic phenol market was weak and fell again at the end of the week. At the beginning of the week, due to the influence of shipping schedule, there was little pressure on the port storage. The shippers had a strong mentality and also intended to rise. However, the downstream acceptance was limited, and the transaction of goods source was poor. Although there was a large amount of goods supply in the near weekend, the expected supply side of domestic factory maintenance was slightly reduced, and the quotation of shippers remained stable due to the cost pressure Strong, but few market inquiries and transactions. It is expected that the domestic phenol market will be weak.

According to the price monitoring of the business community, in the list of commodity prices in the 51st week of 2020 (12.21-12.25), there were 19 kinds of commodities in the chemical industry sector that rose month on month, of which 2 kinds of commodities rose by more than 5%, accounting for 2.2% of the number of commodities monitored in the sector; the top 3 commodities that rose were formic acid (9.42%), propylene glycol (5.02%) and epichlorohydrin (4.11%). There were 30 kinds of commodities with a month on month decrease, and 9 kinds of commodities with a decrease of more than 5%, accounting for 9.8% of the monitored commodities in the sector; the top 3 products with a decrease were silicone DMC (- 21.84%), bisphenol A (- 9.91%) and ox (- 9.09%). This week’s average rise or fall was – 0.69%.

3、 Future forecast

Salicylic acid analysts of business news agency believe that the downstream demand is good this month, the market is in short supply, the shipment is smooth, and the price rises slightly. It is expected that the salicylic acid price will be stable at the end of the month.

According to the price monitoring of the business community, affected by the weakening cost in the near future, the rise of domestic polyester filament Market slowed down last week (December 18 – December 25). As of December 25, the average price of low elastic polyester DTY (150D / 48F) was 7615 yuan / ton, with a weekly increase of 0.60%; the average price of polyester FDY (150D / 96F) was 5971 yuan / ton, with a weekly increase of 0.24%; polyester POY was flat with the beginning of the week.

At present, polyester POY (150D / 48F) of mainstream factories in Jiangsu and Zhejiang is 5650 – 5950 yuan / ton, polyester DTY (150D / 48F) is 7300 – 7750 yuan / ton, and polyester FDY (150D / 96F) is 5800 – 6050 yuan / ton. At present, the market performance is average. The average production and sales of mainstream large factories are 40% – 60%, and the production and sales of some better factories can be even. In terms of inventory, the overall inventory of polyester market is now concentrated in 17-33 days, of which POY inventory is 4-12 days, FDY inventory is about 12-30 days, and DTY inventory is about 19-33 days.

In terms of raw material market and crude oil, international crude oil has continued to make efforts since early November. This week, due to the uncertainty of public health events, the market worried that the recovery of demand would slow down, leading to the decline of crude oil and the weakening of PTA cost support. However, the decline of crude oil and refined oil stocks in the United States and the prospect of brexit agreement in the United Kingdom restrained the decline of oil prices. As of December 24, the WTI closing price of international crude oil was at US $48.23/barrel, while the Brent closing price was at US $51.29/barrel.

The domestic PTA spot market first fell and then rose, showing a slight decline in the week as a whole. As of December 25, the average spot price in the domestic market was 3630 yuan / ton, down 0.68% from the beginning of the week and 25.87% from the same period last year. PTA supply remained at a high level. Due to the limited maintenance efforts, the domestic PTA plant operation rate continued to maintain about 90% in the first half of December. With the maintenance of 4.5 million tons of PTA plant in Fuhai, the PTA industry operation rate dropped to around 85% by December 24. In terms of inventory, weak demand led to a substantial accumulation of domestic PTA inventory again, and the social inventory broke through the 4 million ton mark. As of December 18, domestic PTA social inventory was 4.334 million tons, a significant increase of 3.056 million tons compared with the same period in 2019.

The domestic textile market continues to cool down. The number of orders placed in the downstream weaving market has decreased and the stamina is insufficient. In winter, the turnover of fabrics has decreased month on month. In spring, the orders placed for fabrics are relatively limited. The operating rate is insufficient in some parts, and has now dropped to around 76%. At this stage, affected by the outbreak of overseas epidemic, the situation of foreign trade terminal orders has not improved significantly, and exports will be hindered or face downward risks again.

Xia Ting, an analyst of business news agency, believes that the raw material market will restart the 1.1 million ton PTA plant in Zhuhai this week, and the pressure on its own supply side will increase, but the crude oil shock is near the 10 month high, and the cost support still remains. Downstream demand terminal textile off-season characteristics gradually highlighted, but fortunately near the end of the month and is in the traditional year-end stock, partial delivery is OK. It is expected that in the short term, the market price of polyester filament will be stable and strong.

2020 is a special year in history. In the coming year, the world has experienced the unprecedented impact of the new epidemic, and the global economy has been hit hard. As well as the economic aid plans of Europe, America, Asia and other economies, this year is also a year of difficult economic recovery. The performance of international crude oil has experienced ups and downs. We have also witnessed many historical moments, such as the breakdown of OPEC + talks, ultra scale production reduction, “negative oil prices” and the farce ridden US election. According to the price comparison chart of business club in 2018, 2019 and 2020, the crude oil market in 2020 is the most difficult year.

Let’s first review the crude oil market trend in 2020

On the whole, according to the data of business news agency, as of December 24, 2020, WTI crude oil fell to $48.23/barrel from $61.68/barrel at the beginning of the year, down 21.81%, and Brent crude oil fell to $51.34/barrel from $68.44/barrel at the beginning of the year, down 24.99%.

Since the outbreak of the epidemic at the beginning of the year, the oil price has rapidly entered the downward channel. At first, the market was worried about the decline of China’s fuel demand and the suppression of the economy. From January 20 to January 31, Brent crude oil fell from US $65.20/barrel to US $56.62/barrel, down by US $8.58/barrel (13.2%). WTI crude oil fell from US $58.38/barrel to US $51.56/barrel, a decrease of US $6.82/barrel (11.7%). With the control of China’s epidemic situation and the reduction of OPEC + production, oil prices experienced a brief rebound. In March, the OPEC + production reduction agreement broke down, Russia and Saudi Arabia fought a price war, Saudi Arabia announced a large-scale production increase to gain more market share, and the two sides wrestled with each other to return to the negotiation table. Oil prices plummeted, and WTI fell from $47 at the beginning of March to $20 at the end of the month, a drop of more than 36%.

However, with the rapid spread of the epidemic around the world and the sharp drop in fuel demand, oil prices are still in the downward channel. Subsequently, OPEC + reached an agreement on large-scale production reduction, and OPEC + is ready to jointly reduce production by 9.7 million B / D in May and June. At first, however, the market did not give positive feedback. On the contrary, the sudden drop of demand, the increase of shale oil production in the United States, and the bottleneck of oil storage capacity in the United States, especially the Cushing area near full load, triggered one of the most notable events this year – “negative oil price” event, in which the monthly delivery contract of WTI fell to – 37 US dollars.

After May, OPEC + entered into the period of super scale production reduction, the epidemic situation improved, the demand recovered, and the international oil price began to rise. During the period of super scale production reduction of OPEC + from May to June, WTI rebounded nearly 100%, from $19 at the beginning of May to $38 at the end of June.

In the second half of the year, although the epidemic situation was still fermenting, the economy continued to recover, and the oil price entered a relatively stable stage. In July, OPEC + extended a month’s super scale production reduction (9.7 million barrels), and the production reduction scale dropped to 7.7 million barrels / day from August. From July to October, oil prices have been rising and falling, mainly in the range of shocks. Even the hurricane in the Gulf of Mexico in August and September, and the endless farce in the US election, did not bring about another dramatic shock to oil prices, such as the breakdown of OPEC + negotiations and negative WTI oil prices.

After November, the new crown vaccine made a major breakthrough, oil prices opened up the upward channel, and OPEC + reached a production reduction agreement in early December, which also released a positive signal to the oil market, that is, OPEC + will “increase production” by 500000 barrels / day in January 2021. Due to the small increase in production, it will also give a reassurance to the uncertain crude oil market in the future. On December 10, Brent crude oil once broke the $50 mark, reaching a nearly eight month high. As of December 28, oil prices were still around $50.

Prospects for 2021

Vaccine and epidemic game demand continues to recover

The epidemic situation in 2020 has always existed. At present, the world economy in 2021 may still be shrouded in the shadow of the epidemic situation. Although the vaccine has made a major breakthrough and entered the vaccination process, there are still many variables in the current epidemic situation. For example, the number of infected people is still increasing, Europe and the United States are still implementing restrictive measures, and the virus variants also bring new challenges to the vaccine. The most important factor of oil price around 2021 is still demand. Recently, OPEC has lowered its oil demand forecast for 2021 again. Due to the continuous impact of the new epidemic, the rebound speed of global oil demand in 2021 will be slower than previously expected. Its latest monthly report shows that the demand will increase by 5.9 million barrels / day to 95.89 million barrels / day next year. This growth is expected to be 350000 B / D lower than a month ago. The recovery of demand has a long way to go.

The diminishing marginal benefit of China’s demand

As for the growth of China’s crude oil demand, it may slow down. Since 2020, China’s crude oil demand has also been severely hit by the epidemic, and the prevention and control is appropriate. After April, crude oil consumption has basically recovered to the level before the epidemic. As the oil price remains low, China’s crude oil imports will only increase. Some institutions predict that China’s crude oil imports in 2020 are expected to exceed 550 million tons (11.01 million barrels / day) or even more, an increase of 8.3% over the record 10.16 million barrels / day crude oil imports in 2019. However, the growth of crude oil imports has also led to a substantial increase in domestic crude oil inventory, accompanied by a decline in refinery efficiency and a continuous decline in operating rate. Under the influence of the epidemic, domestic oil product consumption in 2020 will not perform well. The data show that the cumulative apparent consumption of oil products (gasoline, diesel and coal) in the first 10 months of 2020 will be 240 million tons, a year-on-year decrease of 7.2%. It is expected that in 2021, China’s crude oil inventory may continue to grow and demand will continue to recover, but the growth rate may slow down.

Supply side

There are also some risks and variables in the supply of oil in 2021. The risks lie in the geopolitical risks of oil producing countries in the Middle East, the increase of shale oil production in the United States and Libya, and the risks of the U.S. policy towards Iran. The variable lies in the implementation of OPEC +, a loose organization of production reduction agreement, and the continuation of the later production reduction policy.

Stable implementation of OPEC + production reduction agreement

Generally speaking, OPEC + may still implement the policy of gradually reducing the scale of production, and OPEC + should adjust its policy in time according to the recovery of global fuel demand. From January 2021, OPEC + will reduce the production reduction scale from 7.7 million B / D to 7.2 million B / D, increasing by 500000 B / D. in addition, it will hold a ministerial meeting once a month to adjust the production reduction scale in a timely manner, and the monthly adjustment will not exceed 500000 B / D. From the current policy point of view, it should be relatively moderate, and its impact on the market tends to be positive. But we can not rule out the negative effect of some members’ negative production reduction.

Us shale oil may continue to grow and increase supply risk

In terms of shale oil in the United States, due to the rising oil price in the second half of 2020, the increased willingness to invest in shale oil, and the continuous rise of shale oil active drilling rigs, Baker Hughes data show that as of December 18, the number of active drilling rigs in the United States has increased to 264, which has been rising for five consecutive weeks, and the well completion scale has also improved. At present, the market is generally optimistic about the continued economic growth in 2021 Recovery, better fuel demand and oil price may continue to pick up, which may stimulate more enterprises’ willingness to complete inventory wells and increase active drilling rigs. As a result, US crude oil production may increase, which will have a certain impact on the market. However, judging from the ruling policy of Biden’s Democratic Party, it may pay more attention to the development of clean energy in environmental protection and restrict polluting energy. Due to the severe impact of the epidemic on shale oil enterprises before, trump did not strictly abide by the emission standards during his administration. If a new emission standard is formulated next year, it will raise the cost of shale oil enterprises and suppress some demand. But judging from the current economic situation in the United States, the new standards will not be implemented in the first half of the year at least. But in the long run, shale oil investment may be limited by democratic policies.

Geopolitical risks exist for a long time

In addition, there are still geopolitical risks in the Middle East. Attacks on oil fields in the Middle East have occurred from time to time in the past two years. Especially now, the cost of UAV equipment bomb attacks is low and the maneuverability is convenient, which also brings greater risks. But it can only be a short-term impact. As for the U.S. nuclear policy toward Iran, it is not very clear at present. Whether the Iranian nuclear crisis can be lifted is not a day’s work, and it may still have a long way to go. In the short and medium term, the U.S. sanctions against Iran will not be lifted, and the supply risk of Iran is basically controllable in the short and medium term. But in the long run, Iran, including Venezuela, is still the biggest risk point of supply. If the US policy changes, the pressure on market supply will increase significantly.

Overall, the economy will continue to recover in 2021, the global monetary easing environment will not be broken, and the use of vaccines will further dilute the negative impact of the epidemic. In addition, OPEC + production reduction policy should still play a positive role. Shale oil in the United States is expected to grow again. Saudi Arabia, Russia and the United States are still in the triangle of supply side game. As the global oil market continues the process of destocking in the process of demand recovery, it is likely that oil prices will continue to rise, but the uncertainty of demand and the risk of supply may limit the extent of the rise.

As of December 25, the average 180CST price of domestic fuel oil was 3990.00 yuan / ton (including tax), up 0.69% from the beginning of the week, according to the data of business news agency.

On December 25, the fuel oil commodity index was 80.81, up 0.25 points from yesterday, down 30.28% from 115.91 (October 17, 2018), the highest point in the cycle, and up 75.37% from 46.08, the lowest point on August 15, 2016. (Note: period refers to the period from September 1, 2011 to now)

The rise of domestic marine oil raw materials supported fuel oil 180CST, and the business offer rose. According to the business news agency, as of December 25, the self provided low sulfur quotation of fuel oil 180CST in Zhoushan area was 3960 yuan / ton; the self provided low sulfur quotation of fuel oil 120cst was 4060 yuan / ton; the self provided low sulfur quotation of fuel oil 180CST in Shanghai area was 4050 yuan / ton; the self provided low sulfur quotation of fuel oil 120cst was 4150 yuan / ton.

This week, the international crude oil price fluctuated downward, and the support for fuel oil price was limited. In the process of continuous improvement of international crude oil market, it is reported that mutated virus has been found in the UK, and most cities in the UK have implemented strict City closure measures. A number of countries around the world have suspended air traffic with the UK, and the demand for crude oil has been significantly restrained. This week, the international crude oil price had a correction, with WTI crude oil price down 2.05% and Brent crude oil price down 1.76%.

Singapore’s fuel oil inventory has increased, with limited support for fuel oil. It is understood that the Singapore enterprise development board (ESG): in the week ending December 23, fuel oil stocks decreased by 2.435 million barrels to a one-year low of 20.394 million barrels. On December 22, Fukuang shale oil tender launched a total of 9000 tons of shale oil with a turnover of 3900 tons. The weighted average price was 2841 yuan / ton, up 80 yuan / ton.

Future forecast: business community energy analysts believe that the fuel oil 180CST market is in a strong wait-and-see mood in the near future, the downstream demand is limited, and the terminal purchase is mainly on demand. On the whole, it is expected that the fuel oil 180CST market will be stable in the short term.