Daily Report 110914 2014-09-11
Macro Economy
Domestically, Premier Li Keqiang declared at the World Economic Forum yesterday that China’s economy rose by 7.4% in the first half of 2014 while the CPI increased by 2.3%. From January to August, the unemployment rate in 31 large and medium-sized cities remained around 5%. Employment in urban area rose 9.7 million, leading the same figure last year by 0.1 million. China’s economy is facing increasing downward pressure this year. However, it is still believed that China is capable to keep the economy running smoothly. Therefore, hard landing of economy will not take place. It is expected that reform and revolution will continue, but the expectation of outright easing may be fell through. Attention should be paid to CPI and PPI in August being released by the National Bureau of Statistics today. The CPI is expected to grow by 2.2% while the PPI is expected to drop by 1.1%.

The LME three-month aluminum dropped first during the intraday trading and then rebounded, closing at ﹩2064.75 / ton and decreasing by 0.34%. In terms of the aluminum industry, the LME is going to issue aluminum premium contracts in the second quarter of 2015. As for the Shanghai aluminum, long positions are recommended in a short-term trade.
On Wednesday, LME copper has a narrow fluctuation at low price, closed up $ 16.5. Fundamentally, LME spot premium edged up by $6 to $23, inventory increased 900 tons to 156000 tons. Since the middle of August, the inventory level has a straight increasing compared the bottom level of 141000 tons, it increased 15000 tons. Domestic spot price dropped RMB 40 to discount RMB 20 to premium RMB 120. Though the copper price has a sharp slump, spot premium accidently followed the slump. This suggests that the spot market is weak. Besides domestically the supply is quite easing, insufficient consumption is still the main pressure.
Recently cable is in slack season, which is as expected. From April to July, while the micro stimulation policy was processing, the industry has already overdraft. The recent slowdown in China’s economic growth and the negative effect of real estate adjustment would be the main pressure to the market. Technically, copper price is supported by previous low at $6821, short term still under adjustment. We are going to set the resistance on 5-days moving average at $6910/20. Domestic copper in November is RMB 49300.

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