Daily Report 290115 2015-01-29
Domestic AU1596 contracts continued to correct during the night session, chose direction at 5-day moving average of RMB 260.5 in short-term.
Operation advices: long positions established at RMB 247, focus on whether the upward resistance at RMB 263 can be broken through, prepare to defense at RMB 258.
The committee agreed to be patient for interest raise in the Fed’s January Reserve Meeting yesterday, its description for economic growth as transferred from gentle to steady. Yet the dampened inflation and weak overseas economies are the main consideration of the Fed. US dollar index edged up overnight, led to gold prices corrected under the pressure.
Overall, Fed holds an optimistic view towards the economy recovery, expectations for interest raise remains the same. Thus, gold prices are predicted to perform better. On the other hand, pay attention to the result of the negotiation between Greek government and European Union (EU). Beware of heightened risk-aversion sentiments promote gold buying.
Domestic AG1506 contracts continued to correct during the night session, acquired supports at 10-day moving average of RMB 3,800.
Operation advices: for long positions established at RMB 3,600, prepare to defense at RMB 3,800, concern whether the resistance above RMB 3,900 can be broken through.
Overall, silver moves along with gold, while performs as a weak metal. Overseas silver prices encountered strong pressures rebounding at $18.5. Funds revealed that positions of Silver ETF remain sell-on-the-rally since December 2014. Although there has been 32.76 tons of positions increase, less influences this on silver prices boost.
Stock index
Stock index opened low and fluctuated, though rebounded in the afternoon session, plunged rapidly and closed down in the end. Rumors said that China Securities Regulatory Commission (CSRC) is going to conduct a second inspection against securities (margin) financing. CSRC named it as a daily supervision, but the market sentiment waved inevitably. Risk management against leverage funds has been intensified, and this might influence long-term increment fund but has less impacts in short-term. The market slowed down the leverage pace. Majority of heavyweights have difficulties to display tendencies. Therefore, the market is likely to remain edging up associated with fluctuations.
LME copper market traded in a sideways range, rose by 0.48% ($26), closed at $5,460. Domestic 4-month increased by 0.18% (RMB 70), closed at RMB 39,760, positions continued to rise. Overnight the Fed announced to remain the interest rate, and said that although the economy expansion had slowed down, the unemployment rate was low; restated would hold the patience for interest raise, but deleted the statement of “quite a long time”. Overall, this claim is something of war hawk. Accordingly, interest raise possibility increased, and that may undermine copper prices.
On the fundamentals hand, LME spot premium fell back by $7 to $31.75, inventory rose 6,450 tons to 245,000 tons, having surged for 12 trading days to the 9-month high.
On the supply hand, the output of Antofafasta in 2014 is 705,000 tons, decreased by 2.3% month-on-month, matching the aim of 700,000 tons. The main reason for output reducing is the downgrade of the mining. The output is estimated to be 710,000 tons in 2015. Moreover, Antucoya mining which belongs to the company is going to put into production this year. This extended the expected output in 2018 to be 900,000 tons.
Technically, current copper prices are steady in lows, pay attention to supports near previous lows, the supports of LME copper is around $5,340, while for domestic 4-month copper is at RMB 39,000.
Overnight U.S. soybean remained the downward trend, U.S. soymeal edged up being influenced by the high expectation of South American harvest. The market predicted soybean weekly export would be 200,000-400,000 tons in Thursday’s report. Short-term U.S. market fundamentals are relatively flat, U.S. soybean expected export reduced. South American soybean with price advantages would occupy the export share of U.S. soybean, associated with precocious South American soybean harvested in succession. This may further pressure U.S. soybean export. South America producing areas are relatively stable. Brazilian soybean producing areas are more ideal, the water-scarce areas are located around St Paul, having little influences on the overall soybean output. Taken together, the supply and demand aspects of soybean are still bearish, short-term U.S. markets are supposed to remain weakly fluctuating.
DCE soybean continued to climbing down. Hold bearish view for short-term markets, plus the market is going to go through a 2-3-month period of concern downturn. Pay attention to later spot prices changes. Soymeal spot partially edged down by RMB 10-20/ton, plunged below RMB 2,800/ton in Guangdong and Guangxi. The weakness of short-term markets has not changed. Fluctuations in the bottom are unlikely to end.
Operation advices: hold a few number of previous short positions of DCE soymeal; remain the pattern of short-on-the-rebound for soybean No.1.
PP futures opened flat and went high, opened at RMB 7,229 and closed at RMB 7,307, trading volume increased 131,000 lots to 450,000 lots, and positions surged 14,608 lots to 369,000 lots.
On the upstream hand, propylene prices leveled off. On the device hand, current operation rate have no significant changes. On the spot hand, PP prices in most markets weakened yesterday. Some regions lowered petrochemical ex-factory prices, undermining cost supports for the market. Merchants proactively ship, discounted for sale for firm offers. Downstream manufacturers are prudent, have less willingness to take over products, deals were dominated by small orders. Quoted prices of wires were RMB 7,650-7,750/ton in North China markets, RMB 7,650-8,200/ton in East China markets, and RMB 8,150-8,350/ton in South China markets. Fundamentals remained sluggish.
View the market as a whole, prices are fluctuating between RMB 7,000 and RMB 7,500, hard to move downward or upward. No news in short-term. Prices are likely to weakly fluctuate recently.
                                                                               Dong LV (Investment Certificate NO. TZ008452)