Daily Report 201014 2014-10-28
Gold
 
Last Friday, domestic gold dropped in the beginning and then rallied, closing above the 5-day moving average at RMB 245. On the whole, the U.S. economic data released last week was mixed. The retail data slipped slightly, but the employment, housing starts and consumer confidence data all increased strongly. Influenced by the rallying data and the news that enterprises’ financial reports were better than expected, the USD and the U.S. stocks rebounded. The gold was then forced to correct. Attention should be paid on the U.S. CPI, housing and manufacturing data, all of which will be released this week. In terms of funds, the positions of gold ETF remains flat for the past three days. However, the CFTC report shows, till last Tuesday, the net positions of non-commercial gold soared for the first time in recent days while the net positions of commercial gold shrank. It is believed both the speculators and the producers are holding an optimistic view of the gold in the short term. The funds marginally flew back to the gold market, but the persistency of the funds should be focused. On the whole, the pullback of those risk assets provides opportunity for the rebound of gold in the short term. However, if the economy of the U.S. keeps the upward trend, the gold will not be likely to performance well.
As for the operations, previous long positions opened according to the 5-day moving average could be held. The stop-profit should be set at RMB 247.5 and RMB 249.5 respectively and the stop-loss should be set at RMB 244. The performance of gold around the RMB 246.5 is recommended to focus. 
 
 
 
Sliver
 
Last Friday, the performance of silver was not as good as that of gold. For the short term, it is believed the silver will not be able to stand on the 5-day moving average at RMB 3820. As for the operations, defensive moves should be prepared for previous long positions opened at RMB 3830. Opening new positions is not suggested during the intraday trading process. Investors should be cautious toward the pullback risk. In the short term, the rallying momentum of silver is weaker than that of gold. The impact of those U.S. assets on silver is relatively small, indicating the character of weak metal. The silver is still following the trend of gold closely and it is difficult for the silver to get out of the trend independently. In terms of funds, the performances of silver and gold were mixed. The positions of silver ETF funds dropped 35.78 tons last Saturday, indicating the funds are not optimistic toward the silver in the short term. Besides, data from the CFTC demonstrates net positions of non-commercial silver continue shrinking, which means speculators are not holding a positive view of the silver.
 
 
 
Stock index
 
The stock index slumped in the morning session and then rallied on Friday. Last week, part of the economic financial data in September is released. The data is, on the whole, not that satisfying. It could be generated from the weak trend that the economy may grow sound and steadily afterwards. The impact from the data to the market is not that large. The pressure of inflation that China faces is not too much. There is still space for steady growth policy and directional easing policy. According to the China Financial Futures Exchange, the People’s Bank of China plans to provide around RMB 400 billion to a few listed joint-stock commercial banks today. The detail need to be further proved. In the short term, the stock index may be stimulated and rally afterwards due to the positive policy, but the rebound may not be a strong one as the weak economy is highly likely to remain.
 
 
 
Copper
 
Last week, LME copper price was waving around $6600; previously the weak performance of global data hammered the copper price, which resulted in a dramatic falling of $250. For once, the price broke out $6600 till $6530; but with relatively good performance among U.S. data over the weekend, the price rise up above $6600, closed at $6630.
 
Last Friday the U.S. housing starts figure and the consumer confidence index are both in a great performance; currently the market will focus on the Fed meeting on the next Wednesday and Thursday, to figure out the following direction of the U.S. interest rate. Over the weekend, there is rumor suggests that the central bank plans to inject about RMB 200 billion to 20 banks. However this figure is way below the amount they have injected to the big five banks of SLF (which is about RMB 500 billion) on September 17th. The current domestic policies are supporting the copper price in the short term.
 
Fundamentals, LME spot premium dropped $3 to $50 during the weekend; inventory increased 8000 tons to 157700 tons, which has a straight increasing for 5 days. SHFE inventory increased 14000 tons to 97000 tons; the overall increasing in global copper inventory suggests that the whole market is on supply surplus. The increasing of spot copper concentrate processing fee has made China’s copper smelting to produce beyond its capacity; the upcoming production data over September will be a new high; from the supply side it continues to hammer the copper price.
 
Overall, in the short term the copper price will be supported at $6600, but it may wave in the $6550-6800 interval. Further trading could be continued after the adjustment, but on bearish.
 
 
 
Aluminum
 
On Friday, LME 3-month aluminum increased, closed at $1965 per ton, which has a 2.02% increasing. In U.S. housing starts figure increased 6.3% year-on-year, which is better than expected. Russia and Ukraine have a positive progress on the natural gas issue; in domestic market, the securities regulatory commission issued new delisting system of listed companies.
From the industry perspective, at ALUMINIUM there are 90% of businesses expects that aluminum consumption would increase steadily. Indonesia is going to limit its tin export quota. Investors who hold SHFE aluminum should wait and see, and buy in with low price if they want to.
 
 
 
Soybean
 

The U.S. soybean closed lower last Friday due to the nice weather of U.S. producing area, which is good for harvest, and the closing of positions to make profits. In term of news,
1. Weekly export sales reports show that, till October 9, the weekly export of U.S. soybean is 935 thousand tons, which is close to the up bound of expected region.
2. The Informa raised the expectation of U.S. soybean planting area in 2015 to 88.51 million acres.
3. The Brazil soybean is suffering from planting delay. Currently, only 10% of the target has been planted, which is 70% lower on year-on-year basis.
The Dalian soybean meal is strong while the soybean oil is weak. The supply of soybean in the Northern China is insufficient. Besides, the imported soybean is relatively low in this month. The price of soybean spot in the Northern area is strong. It is expected that the short of supply may last to the end of month or the beginning of next month. Recently the No.1 soybean fluctuates violently. The price of new soybean is around RMB 4.5/ kilogram. The funds are still releasing pressure to the soybean futures in far months. In terms of operations, the soybean meal is believed to fluctuate and increase slightly. As for the No.1 soybean, investors are not suggested to make further moves till the correction is over.
   
 
 
PP
 
Last Friday, rebar main position switched to contract 1505; the whole day it remained in a low price with relatively weak adjustment. From the macro perspective, there is rumor suggests that the central bank plans to inject about RMB 200 billion to 20 banks; the main investment area does not involve steel, which means it could hardly support the price.
From the industry perspective, on Friday the spot price of rolled steel continued increasing in some regions; but the price in the main cities as shanghai and Beijing remained stable. Over the weekend, Tangshang billet added up loss is RMB 40 to RMB 2540 per ton; the whole market turns down. In terms of operation, though there is rumor saying that recently during the APEC period Iron and steel related companies will have limited productions; it may stimulate the spot market; in the end as the purchase slowing down, the short term market will become cautious again. Hence we suggest rebar will remain weak trend. For the main contract resistance level, see the performance of RMB 2630 and RMB 2670.
                                                                                                 Dong LV (Investment Certificate NO. TZ008452)