Daily Report 251214 2014-12-25
Macro Economy

The US stock market closed flat yesterday, the stock index lost steam in last minutes. Both S&P 500 index and Dow Jones index (DJI) broke records during the 5-days continuous growth. Specifically, DJI ascended 18,000. The US initial claims for state unemployment benefits reduced 9,000 totaling 280,000—the lowest level since earlier this month. This indicated an improvement and recovery of US labor market at the end of the year. US Energy Information Administration (EIA) reported, crude oil inventory was far more than expected, and Saudi Arabic claimed that only countries with high production efficiency were qualified to earn market share. Thus, WTI crude oil futures slumped over 3%. Crude oil market related futures contracts appeared 3% increase or decrease frequently, such volatility showed the increasing conflicts among the market. For the European aspect, Russian Ruble was stable after former slump. Unfortunately, the Russian domestic financial circumstance is not optimistic, the overnight interest rate surged—6.5% higher than central bank benchmark interest rate, which broke the record high. Currently, the Russian economy is unstable and facing plenty risks.
 
For domestic market, Premier Keqiang Li hosted State Council executive meeting yesterday, pointed out that the Chinese government would simplify overseas listing, merger and acquisition, and establishing bank branches. This is another banking reform action associated with former relaxation for foreign banks to establish local branches. Simultaneously, the government would cancel the geographical restriction on domestic enterprises and commercial banks publishing RMB bonds. And this is beneficial for powerful domestic companies to finance, but is less helpful for small and medium businesses.
 
Besides, Hong Kong stocks, Treasury, the US stocks and European major exchanges will close today.
 
 
 
Gold
 
The 1506 main contracts of domestic gold futures kept declining trend at the night session, pressured at 60-day moving average at RMB 239.5. For operation methods, it is suggested to stay short positions for last week’s contracts at RMB 242.5, stop loss at RMB 243.5, and stop win at RMB 233.5. In late afternoon trading, the contract weakly bottomed below RMB 237.5, try short operation, stop loss at RMB 239, and stop win at RMB 234.5. According to the boosting US economy, gold price is estimated to keep weak. EFT gold contracts stayed the same overnight after 11.65 tons’ cut on Wednesday. Funds have stronger selling power against gold this week.
 
 
 
Silver
 
The 1506 main contracts of domestic silver futures decreased slightly at the night session, pressured at 20-day moving average of RMB 3,485. For operation methods, it is suggested to stay short positions for last week’s contracts at RMB 3,560, and stop loss at RMB 3,590, pay attention to the performance at RMB 3,400 in the late afternoon session. The silver price is moving with the gold price as a whole, and lacks rebound momentum, pressured at RMB 3,700. Positions for the ETF silver contracts were “deliver once the price is high”. There were 7 lighten-ups this month, cut 235.33 tons overnight, which indicated bearish view of funds for the silver in afternoon session.
 
 
 
Copper
 
The LME copper market trading volume was light on Wednesday, the copper price closed down at $6,312 (reduced $26.5). Decreasing domestic demand and the overnight US crude oil prices pressured the copper market. The LME closed earlier due to the Christmas Eve, and was closed on Thursday and Friday. The COMEX closed on Thursday. From the overnight data, the initial claims for state unemployment benefits were lower than expected, had kept decrease for 4 weeks. The domestic spot premium expanded RMB 40 to RMB 140-200. Trading volume tended to be lighter, and the import deficit stayed around RMB 200. Spot copper premium expanded, while actual trading volume was light, less enters from downstream. Yantai Penghui Copper suspended production this week, and this factory was partially controlled by Jiangxi Copper. Its producing abilities of crude copper and refined copper were 100,000 tons and 120,000 tons respectively. This company announced bankrupt yesterday. Technically, current copper prices are volatile between $6,230 and $6,500, it is better to wait for the economy brightness.
 
 
 
Aluminum
 
On Wednesday the price of LME 3-month aluminum fluctuating, closed at $1866.75 per ton, down by 0.17%. State council executive meeting announced state will simplify examination process, expand financing, complete policies, encourage enterprises to go abroad for businesses and also it passed the social endowment insurance reform. We suggest to buy in SHFE aluminum and hold it.
 
 
 
Soybean
 
Overnight U.S. soybean market appeared weak and closed down, which was impacted by the spots are in weak market and Christmas holidays. OTC market closed earlier, it will open again on midnight 26th. DCE soybean no. 1 contract was fluctuating in both sides. Pay attention to the settlement of contract 1501, it has drawn lots of attention among the markets. After the settlement of this contract, the purchase will stop temporarily;the price in back months may call back. 
 
DCE soymeal remains in weak and call back situation; the spots today are stable, domestic supply issue is the main reason which leads to the price falling. Currently the spots price along the coastal areas is around RMB 3180-3220 per ton. The market is expected there will have over 14.5 million tons imported soybean arrives from this month to the next month. Hence in the short term there is still rally momentum. In terms of operation, DCE soymeal is bearish in short term. Soybean no.1 contract remains light short positions.
 
 
 
PP
 
Yesterday the price of PP futures fluctuated, opened at RMB 7880 and closed at RMB 7830. Trading volume increased 91288 lots to 487000 lots; the holdings increased 4964 lots to 25600 lots. From the upstream, since U.S. crude oil inventories increased and the international crude oil price continues falling; WTI crude oil dropped $1.28 to the average price $55.84 a barrel; Brent crude fell $1.45 to average price $60.24 a barrel. Propylene price remains the same.
In terms of devices, current rate of operation is normal for now there is no sign of new massive maintenance. For spots perspective, among the majority markets pp price has a narrow adjustment. For instance of the wire drawing price, today's mainstream of North China bid in RMB 9200-9450 per ton, East China mainstream quotation in RMB 9450-9850 per ton, South China mainstream quotation in RMB 9450-9700 per ton.
                                                                                Dong LV (Investment Certificate NO. TZ008452)