Daily Report 160115 2015-01-16
Macro Economy
Data released yesterday revealed that monthly new RMB loans of December is 6,973 billion, lower than expected; while the monthly social financing scale surged to RMB 16.9 trillion, far more than expected. As for M2, it slid to 12.2%. Specifically, the scale of entrusted loans and trust loans and other shadow banks largely expanded, and medium-long-term loans exploded simultaneously. The increase of medium-long-term loans continuously enhances economic growth, whether the trend can be remained is the critical concern in status quo.
After trade-offs in heavy volume met supports on Wednesday, copper prices in domestic and overseas market kept bouncing back on Thursday, but still not reversed all the decline of the former day. LME copper closed up by $143 at $5,653. Domestic 4-month copper contract closed at RMB 40,600. The international market was a mess on Thursday, that. U.S. crude oil slumped due to supply surplus, the biggest drop was 4%; Swiss central bank surprisingly announced to cancel the applied floor of the exchange rate euro against franc, franc appreciated by nearly 30% against euro; us dollar exchange rate surged. Accordingly, the market considered that the Euro Zone would promote QE in a short time, while the economy is unable to revive. The International Monetary Fund (IMF) said that crude oil failure and the U.S. economy could not save the whole world’s economy.
Back to the copper market, LME spot premium slumped by $20 at $50, inventory surged 4,725 tons to 198,700 tons, having increased by approximately 13% of 22,000 tons; Asia and Europe contributed the most of the increase. The increasing growth of inventory rebound might be relative to the brightness of surplus copper supply. Overall, market divergence expanded after the collapse, view the short-term development, the rebound of copper prices has hit a speed dump, and is expected to fluctuate at lows in short-term. We suppose sell-offs are limited, if the price can break through the top of Thursday, then the rebound space would continue to expand. Concern the result of copper price fluctuating at lows.
LME three-month aluminum contract closed up by 0.76% at $1,788.75/ton on Thursday. Swiss central bank canceled the ceiling of exchange rate against euro. Germany economic growth rate in 2014 is 1.5%. Stock markets of Europe and U.S. were mixed.
The ministry raised industrial land price; People’s Bank of China (PBC) would readjust financial institutional borrowing caliber, it announced that M2 of December increased 12.2% compared to last year. On the industry hand, the State Council published Advices of Pursuing the Third Management Party for Environment Pollution, emphasized on charging polluters, market operation and government guidance, to pursue the third party management. Alcoa showed no interests on restarting the paused alumina. SHFE aluminum remains rebounding.
Overnight U.S. soybean broke the resistance and fell, 3-month contract hit the 6-week low and broke the resistance of 1,000 cents affected by the crush data released by NOPA which lower than expected. Data shows that U.S. soybean crush volume of December is 1.6538 billion bushels, the second highest figure, expected of 1.669 billion bushels. Besides, weekly export sale is better than expected, precisely, the yearly net soybean sale of 2014 and 2015 is 1,130,000 tons, 24% higher than last week. View the performance of the market, the data limitedly dragged the price, December’s data of crush and export sale seemed not bad, the decline of the market was mainly caused by weak commodity environment, and bearish market. If U.S. soybean cannot revive the resistance at $1,000, the short-term market would step into the next layer of weak pattern. DCE A slowed down, DCE A1501 contract is next to the final delivery. Thus, market attention would further undermine. Since spot weakness remains, the rebound of DCE A1505 and A1509 contracts has to encounter the stress form later delivery. Soymeal dropped along with the overseas market in the night session, and the market is approaching to previous lows, plus weak domestic spot, domestic market is going to test the previous lows’ supports.
On the operation hand, take short positions on DCE soymeal, short soybean No.1 along with rebounds.
PP futures opened high and fluctuated yesterday, opened at RMB 7,280 and closed at RMB 7,314, trading volume reduced 90,134 lots to 642,000 lots, and positions decreased 9,896 lots to 350,000 lots. On the upstream hand, global oil surged and then plunged, WTI crude oil dipped $2.23 and averaged at $46.25/barrel. On the device hand, maintenance is normal, no signs of new scale maintenance. On the spot hand, domestic PP market showed signs of stabilization and recovered yesterday, a part of prices rose RMB 50-100/ton. Crude oil technically bounced back and triggered the futures opened high and went high, thus, investors pessimistic sentiments have been eased. Plus arrivals were not much, merchants tried to ship in a high quoted price. Downstream manufacturers moderately purchased according to the orders, trading volume of firm offer has increased.
Since petrochemical tends to be stable, investors are prudent towards afternoon session, there is limited increase for the price. Take wires as an example, north China quoted at RMB 8,100-8,200/ton, east China quoted at RMB 8,300-8,600/ton, and south China quoted at RMB 8,500-8,800/ton. Needs in fundamentals improved, but, still, need confirmation. View the market, the moving average system is bear, showing a rebound trend in short-term, the recent expected fluctuation interval is RMB 7,000-7,500.
                                                                                        Dong LV (Investment Certificate NO. TZ008452)