First of all, we seem to be back to the market in the first half of 2017. Traders' hedge short positions were locked up, and a large number of spot was locked. Until crude oil fell sharply, and at the same time a huge amount of spot was unlocked to hit the market, spot and futures prices fell sharply. In the short term, downstream companies replenish inventory, and prices fluctuate or rebound slightly. The key factor in the mid-term market is still limited downstream orders, processing plants and traders are in a state of reducing inventory, and the mid-term market decline is not over.
Second, the key to ending the current round of negative feedback in the downstream demand side of the obvious expansion. In the current situation, if late April still can not see this situation, the market terminal demand in the second quarter basically powerless to expand, market demand expansion may have to wait until after June. At the same time, the current arbitrage position of buying spot and short futures in the market constitutes an upward drive during the rising period and will also help the decline during the falling period. This negative feedback even caused a collapse in 2017. Although equipment maintenance began to increase in April, it can only provide some support in terms of basis.
Third, fiscal easing, monetary easing, and inflation are major trends, and there should not be too much hesitation. In the off-season of the first half of 2021, terminal demand will not be able to expand further, leading to a decline in terminal operating rates and reduced stockpiling, which may cause commodity prices to weaken in the second quarter. However, the inflation pattern in the second half of the year will continue to support commodity prices.