Daily Report 271114 2014-11-27
Macro Economy

Given the US stock market growth and the benchmark stock index closed at a record high, investors optimistically projected that the economy would be strong enough to resist the crush of overseas slowdown. Initial claims for state unemployment benefits increased for 2,100, 31300 in total, which was the highest level since September, the US polled. The University of Michigan consumer confidence composite index grew from October’s 86.9, to 88.8--the highest level since July, 2007. Durable goods orders rose 0.4%, while the consumption of vehicles dipped 0.9%. The consumption of newly built houses has an increased annulus growth, whereas the annulus growth of second-hand estate sales dropped 1.1%. The rising labour market unemployment proved a mixed message. Initial claims for state unemployment benefits has soared 35,000 from the end of October, are less than expected, which means that labour market strengthen is risking sluggish. Unemployment may worsen again if this continued. Besides, Saudi Arabic’s oil president said in the front of OPEC meeting, that the oil price would be stable eventually, so that memberships should not cut outputs to cause the falling of oil price. In domestic area, Li Keqiang, the prime minister, chaired a State Council executive meeting yesterday to announce the plan of energetically developing the outsourcing of software and information technology, investment, finance, government service and so forth. The meeting also passed Air Pollution Prevention and Control (Draft) to provide judicial guarantee for air pollution control.


The price of domestic gold has been narrowly adjusted in the night session, short-term concern the performance of 5-day moving average RMB 238. In operation, long positions opened at 5-day moving average RMB 230 can be closed at RMB 239 to make profit. Although there are not enough momentum of resilience in a short-term, wait-and-see policy is suggested. As a whole, gold price is predicted to be resilient before the final results for the Sunday ended Nov. 30, where Swiss National Bank is going to act a referendum for increasing gold reverse. The risk is the probable price shrink if the referendum was rejected. The newly released information about the real estate, consumer confidence, employment and personal income data are lower than expected. Even though, this shows a modest recovery of the US economy, added that trade market will be closed on Thursday and Friday, where trade volumes will be light ahead of the Thanksgiving Day, and international gold price will be narrowly adjusted. The financing area shows that the Funds, still, are unloading gold as they are bearish about the price. The position of gold ETF slipped 2.09 t overnight after 6-day remained the same.


There was limited amplitude in the night session, focusing on 5-day moving average at RMB 3450 in short-term. As for operations, long positions opened previously when the gold broke through 5-day moving average at RMB 3350 could be closed at RMB 3480 to make a profit. On the whole, the silver is still following the trend of gold. It wound be hardly likely for the silver to get out the trend independently. Positions of overnight silver ETF remained flat for the past 5 days. Although there are not enough momentum of resilience in a short-term, wait-and-see policy is suggested. Overall, silver is still following the trend of gold, and hardly to develop an independent quotation. Silver ETF remained the same overnight after the sunk of 41.37 t on Tuesday proved by the funds.


On Wednesday, LME 3-month aluminum edged up; closed at $2061 per ton, up 0.59%. SHFE aluminum may rise up.


Overnight U.S. soybean has a transverse finishing; as it is about to have Thanksgiving holiday, the price of nearby soybean meal futures increased. For now the U.S. soybean price is waving around $10-11; current focus should be on the huge amount of supply and the demand of the market; judging from historical data, by the end of Q4 to 2015 Jan., the market volatility would be in the trend of waving up. Though this year there is a heavy pressure from the supply, the market has already consumed previous bearish thoughts due to the increasing of supply. In the future, any bullish news would support the market somehow.
For DCE soybean No.1 contract, it appears weak in general. The spot price near the manufacturing location remains low; we expected that the price of further month contract is heavily under pressure. DCE soybean meal callback pattern continues; the spot price in south China and east China has already lower than RMB 3300 per ton; the pre-sale price of spot price in early next month is lower than RMB 3200 per ton. We suggest that for DCE soybean meal occasionally short; for short position of soybean No. 1 contract occasionally stop-profit.


Yesterday pp futures fluctuated violently; it opened at RMB 8785 and closed at 8795. The trading volume dropped 75744 lots to 197000 lots; the holdings increased 2282 lots to 16500. From the upstream, crude oil is in weak and downward trend; propylene price dropped $10, the average price is $1025.5 per ton. From the device, current rate of operation is around 85%, which is slightly above last week but lower than last month.
For spots, yesterday among most markets pp price was relatively stable with slight fallback, which is around RMB 50 per ton. Petrochemical in east China, south China and CPC in east China, south China have partially lowered their ex-factory price; it has less support to the cost of goods supply. Merchants followed the downward trend to sell; generally they think further market will be bearish. For instance of the wire drawing price, today's mainstream of North China bid in RMB 10050-10250 per ton, East China mainstream quotation around RMB 10200-10450 per ton, South China mainstream quotation in RMB 10350-10550 per ton.
                                                                                       Dong LV (Investment Certificate NO. TZ008452)