Daily Report 090115 2015-01-09
Macro Economy
National Bureau of Statistics of the People’s Republic of China (PRC) would report the CPI and PPI of December this morning; the expected values are 1.5% and -3.1%. Besides, the U.S. nonfarm payrolls of December is set for release at 9.30 p.m. tonight, is expected to post a reading of 241,000—the greatest performance since 1999. Former data is suggested to be most concerned.
Stock Index
The stock index shocked and bounced back yesterday, spot trading volume shrunk further. Financial stocks and other heavyweights require adjustments due to previous significant growth. Adding that 19 new shares would subscribe next week, funds are meeting a new round of challenges. Nevertheless, support elements of funds rate cut expectation and reformation remain unchanged, and the downside for the market is limited though the later market bears pressures of further adjustments. Pay attention to the CPI and PPI of December that released today.
The LME copper market still fluctuated at lows on Thursday, closed down $3 at $6,124. Crude oil slowed down the downward trend at lows, while the U.S. dollar index pressured the copper market by continuous growing. The Fed’s interest rate meeting notes revealed that the U.S. is unlikely to raise the interest rate before April. Accordingly, overnight U.S. stock market surged. But there are limited supports for the copper market since the main problem of current global market is structural issues, and economies of Europe, Japan and emerging countries especially China lack boosting points, these all obstruct the growth of copper demand. The new weekly U.S. initial claims for state unemployment benefits is 294,000, the four-week’s mean value  is lower than expected and previous values, indicating a stable labor market. The market expectation of nonfarm payrolls data released today is an increase of 240,000.
As for fundamentals, LME spot premium slightly slipped $4 at $72, inventory expanded 550 tons to 179,000 tons. View domestic spot, the spread between one-month contract and two-month contract is over RMB 400, position holders are eager to clear their positions, while consumers are still buying as needed. Thus, spot discount expanded RMB 100 at RMB 160-40. Information from the supply side, the State Reserve Bureau of PRC is possibly holding 130,000-150,000 tons of copper inventory, having purchased 60,000-70,000 tons of copper, and it is expected to significantly undermine this figure in 2015.
Technically, copper prices are experiencing adjustments at lows in a short-term, pay attention at the effectiveness of resistance at $6,180.
LME three-month aluminum contract surged on Thursday, closed up 2.33% at $1,833.75 per ton. The Fed slowed down the interest raise, and the Euro Zone expectation of easing heated up, thus, the U.S. and European stock markets rebounded.
China’s new urbanization examination cities list was released, and CPI and PPI would be released today. As for the industry aspect, Chicago high-speed rail started construction, and is predicted to be accomplished in 2029, this means the U.S. unlocked the age of high-speed rail construction. The National Development and Reform Commission (NDRC) of PRC readjusted onshore wind prices of 2016 before 2015, lowered the price for RMB 0.02. Chinalco reduced the quoted price of spot aluminum. The CEO of Constellium, one of the aluminum producers, said that the downward trend of oil prices and the upward trend of the demand of vehicle aluminum plate remained unchanged. Accordingly, SHFE aluminum bounced back.
Overnight U.S. soybean closed down influenced by soymeal futures’ fallback and profit-taking. Information: 1. Weekly export report shows that the weekly U.S. soybean export volume is 910,000 tons, increased 49% compare with last week; 1,690,000 tons for shipment. Soymeal export volume is 37,300 tons, lower than the expected interval. Soybean oil export volume is 30,200 tons, higher than expected. 2. According to the weather forecast, the midwest and southeast part of Brazil had few rainfalls in the last two weeks which may cause output reduction. U.S. soybean pressured at 1,060 cents, the market is waiting for the guideline of next week’s report; short-term prices would wave between 1,000-1,060 cents, pay attention to the USDA demand and supply report and inventory adjustments.
DCE soybean No.1 contract performed stable, the market is observing the ultimate delivery volume of 1501 contract. Domestic soybean spot prices remained between RMB 4,240 and RMB 4,320 per ton. Associated with the accomplishment of 1501 contract delivery, the rebounds of 1505 and 1509 contracts are pressured by later delivery selling. Some regions lowered soymeal spot prices by RMB 10-20 per ton, and the market expected 7,000,000 tons of soybean arrival in January, thus, the growth of price is restrained.
For operation advices, bear DCE soymeal when the price is moving along RMB 2,800 under the waving interval; observe soybean No.1 contract.
PP futures fluctuated and moved downhill yesterday, opened at RMB 7,480 and closed at RMB 7,389, the trading volume declined 150,000 lots to 532,000 lots, position holdings boosted 34,030 lots to 367,000 lots. For the upstream aspect, propylene prices rebounded, FOB Korea propylene surged $10 and averaged at $670.5 per ton. As for the device aspect, today’s operation rate is the same with previous value, no signs of concentrated maintenance. For the spot aspect, domestic PP market prices remained downward trend, but with a smaller range compared to yesterday.
China Oil lowered the quoted price of north, northeast and south China, bearish sentiment is waving in the market. Parts of petrochemical enterprises lowered the price then canceled, and this caused investors to remain bearing the later market. Downstream manufacturers have limited demand, adding the negative investment mood, trading volume was light with low-price deals in dominant. Take wires as an example, north China quoted at RMB 8,400-8,800 per ton, east China quoted at RMB 8,500-8,800 per ton, and south China quoted at RMB 8,800-9,250 per ton. Bearish sentiment of fundamentals remained.
View the whole market, current prices plunged below RMB 7,500, MACD red bar shortened and is forming a death cross, and the arrangement of moving averages is becoming a bearish pattern, it is suggested to adopt ban operation since the market seems to be volatile and bearish, the volatile interval is RMB 7,000-7,500.
                                                                                     Dong LV (Investment Certificate NO. TZ008452)