Champion's Master Replay Notes (December 4): New highs again, palm oil and aluminum oxide bulls continue!

Content

December 4

Champion's Expert Review Notes

Abstract:

Indonesia reiterates B40, palm oil commercial destocking continues, reaching a new high, a similar market also exists for alumina, with supply not recovering and frequent domestic maintenance, leading to continued destocking supported by bulls, alumina also reaches a new high, do both of these varieties have the risk of forced liquidation?

European Line:

Signal prompt: Currently, the European line has some support, it is recommended to wait and see.

Trading signal source: Exclusive trading system of the champion expert Tianji Bian

From a geopolitical perspective, the ceasefire agreement between Lebanon and Israel has officially come into effect. Hamas officials claim they are ready to reach a ceasefire agreement in the Gaza Strip. The geopolitical advantages have weakened, but it should be noted that recently, Israel and Hezbollah have accused each other of violating the ceasefire agreement, so attention should be paid to the latest geopolitical developments. From a macro perspective, the European Central Bank's expectation of a rate cut in December continues. Domestically, the Ministry of Finance claims that there is still a package of incremental strategies on the way, with 500 billion liquidity being implemented, the central bank lowering the reserve requirement ratio, and further reductions being needed. The buyout reverse repurchase operations have been activated, short-term liquidity has strengthened, and MLF, SLF, and LPR have followed with interest rate cuts. The favorable policies related to real estate continue to advance, but they are still not meeting expectations, and short-term pressure remains.

From the capacity side, in terms of European ports, Rotterdam, Antwerp, Hamburg, and Felixstowe have average berthing times for ocean-going container ships of 8.9 hours/37.5 hours, 8.8 hours/39.1 hours, 34.2 hours/55.3 hours, and 9.7 hours/63.0 hours respectively. The latest number of anchored/berthing container ships reached 1 ship/35 ships, 4 ships/15 ships, and 4 ships/19 ships respectively. Overall, there is marginal improvement in operations at Northwest European and Mediterranean ports. From the spot market perspective, the online quotes for shipping schedules in the second half of the month on the Europe route remain high, with HPL quotes increasing. The expectation for price support in the second half of the month is still present, but attention should be paid to the actual cargo solicitation situation on the spot market in the future. According to data from the Shanghai Shipping Exchange, as of December 2, 2024, the Shanghai Export Container Freight Index (European route) is reported at 2828.63 points, a decrease of 1.2% compared to the previous period.

After forming a high position doji signal near the previous high of 3471.8, a ceasefire agreement was reached, breaking the original high-level consolidation situation. Currently, the MACD has formed a high position death cross, and subsequent attention should be paid to the performance near the support of the six-month line, with resistance above near the MA10 daily moving average.

Signal prompt: Currently, rubber is in a bullish trend

Trading signal source: Exclusive trading system of the champion expert Tianji Bian

On November 28, Ms. Daisuli, Secretary-General and Spokesperson of the Ministry of Interior, pointed out that there has been extreme heavy rainfall in the southern region, leading to flooding disasters in many areas, with many regions at risk of flooding and landslides. The southern provinces of Thailand have been affected by severe flooding due to heavy rain, impacting over 130,000 households. As of the evening of November 28, 2024, the Thai Meteorological Department announced the rainfall situation on November 27, 2024, observing record-breaking rainfall in southern regions such as Takhli, Nakhon Si Thammarat, and Songkhla, reaching a three-year high. Regarding the latest situation of the disaster in the southern region, the Disaster Prevention and Mitigation Department reported that currently, 7 provinces, 50 counties, 321 towns, and 1,884 villages are affected. In the 7 affected provinces, the total natural rubber production in 2023 was 1.875 million tons, accounting for 39.0% of Thailand's total natural rubber production in 2023.

According to data from Longzhong Information, the demand for all-steel tires continues to operate weakly as we enter the fourth quarter. In terms of domestic demand, the northern market is gradually entering a seasonal off-peak period, and sales growth is limited. Additionally, facing the current situation of many vehicles and few jobs in the transportation market, with thin profits and shrinking demand for medium and short distances, the enthusiasm of fleets and owners to replace vehicles with new ones before the year-end is difficult to stimulate. On the export side, there is currently significant uncertainty. In previous years, overseas customers would appropriately restock before the Spring Festival holiday, leading to a slight increase in domestic tire export volumes in November and December. Looking at the October export data for truck and bus tires released later, there was a noticeable increase in export volume for that month. Industry players interpret this data as indicating that overseas customers had a demand for early stocking before Trump officially took office, thereby avoiding various uncertainties that may arise later. This stocking demand will provide some impetus for exports in October and even November, but it also lays the groundwork for increased difficulty in exports later on. Overall, the optimistic expectations for future rubber demand are limited. In the short term, rubber is mainly affected by sudden events, with overall fluctuations as the main trend. Under the background of strong supply and weak demand, rubber prices will still face pressure in the long term, but short-term event impacts will increase volatility.

From a technical perspective, after a period of weakness, rubber prices ran at a low level for a short time, and due to the impact of the floods in Thailand on supply, prices quickly surged, rising rapidly from a low level to the range of 17000-19000, with increased short-term volatility. Although the floods in Thailand have a significant impact on rubber supply, the long-term fundamentals of rubber still face pressure, so it is not advisable to be overly bullish. In the future, pay attention to the pressure levels in the range of 19100-19400 above, as well as the conversion of pressure and support and the risks of short-term fluctuations.

Palm oil:

Signal prompt: Currently, palm oil is supported after a pullback, in a bullish trend.

Trading signal source: Exclusive trading system of the champion expert Tianji Bian

The reference price for crude palm oil in Indonesia for December 2024 is set at $1071.67 per ton, up from $961.97 last month. The export tax is $178 per ton, up from $124 per ton last month. On November 19, according to MPOB data, Malaysia's export tax for crude palm oil in December was raised from 8% to 10%, triggering the highest tariff standard of 10%. The increase in taxes at the place of origin will continue to raise costs for importing countries. On November 29, Indonesia's Coordinating Minister for Economic Affairs stated that the palm oil fund management agency has sufficient funds to support Indonesia's implementation of the B40 biodiesel program in January. According to previous estimates by APROBI, B40 will increase Indonesia's palm oil usage for biodiesel from 11 million tons to 13.9 million tons.

SPPOMA data shows that from November 1 to 25, Malaysia's palm oil production decreased by 3.24% month-on-month. High-frequency shipping data indicates that Malaysia's exports from the 1st to the 25th have declined month-on-month. As palm oil prices continue to rise, major demand countries like India and China can only reduce their purchase volumes and seek alternative oils. Steel Union expects domestic palm oil consumption in November to be around 250,000 tons, with downstream continuing to maintain essential procurement and limited transactions, and recently adding one new ship for purchase. Overall, some investment funds are continuing to allocate more to palm oil and positioning in the 05 contract. Recently, Malaysia has experienced continuous heavy rainfall, and it is now the production reduction season, with expectations of continued decline in palm oil production in December. After Indonesia implements B40, exports are expected to decrease, and importing countries can only passively accept high prices.

The palm short-term structure futures prices stabilized and fluctuated higher after a pullback last week, engulfing most of the pullback decline. Currently, it shows a strong consolidation at a high level, combined with a generally strong pattern in the larger structure, presenting an overall strong consolidation.

Alumina:

Signal prompt: Currently, alumina is in a bullish trend

Trading signal source: Exclusive trading system of the champion expert Tianji Bian

On the supply side, last week domestic ore prices continued to trend high, with the tax-inclusive quotation for Shanxi ore 58/5 rising to 780 yuan/ton, and the tax-inclusive price for Henan's 58/5 rising to 700 yuan/ton. The tax-inclusive price for Guizhou's 60/6 bauxite at the factory exceeded 650 yuan/ton. There are no signs of resumption of production in the mining areas of Jin and Yu, and some areas in Henan have implemented controls on heavy pollution weather, with production limits still in place for some mines. With the arrival of winter, subsequent ore supply will be affected to some extent. In the southern region, the supply of self-supplied ore in Guangxi is stable. Environmental inspections in Guizhou have come to a conclusion, and most open-pit mines in Qingzhen have resumed production.

In terms of imported ore, shipping freight prices have been reduced, with Capesize ship quotes from Guinea to China around $22/ton. During the period, 3.58 million tons of new ore arrived, including 2.19 million tons from Guinea, 1.33 million tons from Australia, and 50,000 tons from Turkey, a slight increase compared to last week. The spot price increase of alumina has slowed down. The comprehensive price of Aladdin (ALD) in the north is between 5720-5800 yuan/ton, an increase of 20 yuan/ton compared to last week; the domestic weighted index is 5763.7 yuan/ton, an increase of 11.8 yuan/ton compared to last week. The operating capacity of alumina is 88.45 million tons, an increase of 50,000 tons compared to last week, with an alumina operating rate of 84.22%.

In terms of demand, the current operating capacity of domestic electrolytic aluminum is 43.688 million tons, a decrease of 5,000 tons week-on-week. In terms of inventory, Aladdin (ALD) research statistics show that as of this Thursday (November 28), the national alumina inventory is 3.059 million tons, a decrease of 6,000 tons compared to last week. The registered warehouse receipts for alumina on the Shanghai Futures Exchange are 53,166 tons, a decrease of 16,521 tons compared to last week.

From the perspective of alumina fundamentals, there is a slight improvement in supply and demand, but it is still in a relatively tight state. The bullish support is still present, but the downstream electrolytic aluminum is experiencing large-scale losses, which may squeeze the upward space for alumina, requiring caution.

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Summary
On December 4, the article discusses the current market trends for palm oil and alumina, highlighting Indonesia's reaffirmation of B40 and the ongoing commercial destocking of palm oil, which has reached new highs. Similar trends are observed in alumina due to supply disruptions and frequent domestic maintenance. The article raises concerns about potential short squeeze risks for both commodities. It also notes geopolitical developments, including the formal implementation of a ceasefire agreement in Gaza, which has reduced geopolitical risks, although tensions remain between Israel and Hezbollah. On the macroeconomic front, expectations for a European Central Bank rate cut persist, with liquidity measures being implemented in China. The article provides insights into European port operations, indicating marginal improvements, while also discussing the rubber market, which is currently influenced by severe flooding in southern Thailand affecting rubber production. Despite short-term price increases due to supply disruptions, the long-term outlook for rubber remains cautious due to weak demand. Overall, the article emphasizes the need for careful monitoring of market signals and geopolitical developments affecting commodity prices.