Daily Report 030315 2015-03-03
Main contract of domestic gold AU 1506 fluctuated and then dropped in the night session. In short term, moving averages stick close to each other, which may lead to a new trend afterward. The bolster effect of 60-day moving average at RMB 247.5 should be focused. In terms of trends, the gold shows a downward drift based on the weekly trend lines. However, bolster effect was found around RMB 244, which may leads to fluctuations recently.
As for the 250-day moving average, it is hardly likely for it to break through RMB 252. Previous short positions opened at RMB 254.5 could be closed. Sound investors are recommended to pay attention to the operational opportunities after the gold breaks through the region between RMB 244 and RMB 250. In respect of the funds, overnight gold ETF positions plunged 7.76 tons after remaining flat for 9 straight days, indicating the market risk-aversion sentiment is cooling down as the Greece and Ukraine’s political risk is fading away.
Main contract of domestic silver AG 1506 dropped slightly in the night session. However, strong bolster was found along 60-day moving average at RMB 3590 in short term. On the whole, the silver price changes following the gold. It is believed the silver may remain a downward trend afterwards. Previous short positions opened at RMB 3800 could be held. Defensive moves should be prepared at RMB 3700. In short term, the silver is likely to fluctuate between the regions from RMB 3550 to RMB 3700. Sound investors are recommended to focus on operational opportunities after the break through of that region. The overnight silver ETF positions remain flat for the past six days.
Stock Index
Stock index fluctuated yesterday. The rate cut, being forecast by previous increase, finally comes to reality. The Chinese people's Political Consultative Conference will be held this afternoon. It is expected that a series of combinational policies will be released after this conference. After the rate cut yesterday, it is believed that the bank stocks may drop afterwards, which will drag down the index. China Securities Regulatory Commission chairman Shang Fulin claims that the banking industry should change its way of development. There may not be too much positive news for the banking industry before any benefit goes into real economy. Anyway, the market is expecting future policies released by the government. The stock index is not likely to continue dropping and investors are recommended to open long positions when the index is low.
On Monday both domestic and foreign markets are fluctuating in high prices. LME copper price closed at $5917.5, up $21.5; in domestic market copper contract in May closed at RMB 42990.
According to the fundamentals, LME spot premium fell back $9 to $20; the holding slightly increased 825 tons to 297000 ton. Domestic spot premium increased RMB 20 to RMB 220-120. SHFE copper next month spread is within RMB 100. The imported copper arrived in a great amount, so there is less pressure on the spot supply. The downstream buys in slightly so it is in supply surplus.
Technically, copper price is still in rally; for instance domestic contract of May is supported at RMB 42900 on 60-day moving average; in short term pay attention if this support is efficient, if so the price will rally towards RMB 44000.
On Monday the price of LME 3-month aluminum dropped, closed at $1805 per ton which decreased by 0.55%. LME sets up new plan to cut warehouse inventory; also it plans to launch new aluminum premium contracts, according to industry news. We suggest buying SHFE aluminum on dips.
Overnight U.S. Soybean price fell back, which is caused by less export demand than expectations and also the Brazil strike cools down. We think current rally is periodical, the influence of Brazil strike on the quotation is short period.
In domestic market, overnight soybean meal follows the foreign market fell back quickly; we forecast that the spot price today will follow the market to drop as well;Currently in most markets the spot price increased to over RMB 3050 per ton; the short rally in futures may probably end up; hence we suggest investors hold long positions continue to operate based on stop profit.
Soybeans No. 1 contact is fluctuating below RMB 4300 per ton, in short term it still appears weak in performance. Domestic soybean still remains its trend before Chinese New Year. Currently the trading volume is in small amount; also current situation is hard to attract more merchants to join in the market. In terms of operation, long positions of soybean meal continue to stop profit; wait and see how soybeans No. 1 contract may perform.
Yesterday PP futures opened up high and followed with a high trend. It opened at RMB 8342 and closed at RMB 8532. The trading volume increased 50874 lots to 872000 lots; the holdings increased 16292 lots to 262000 lots. In terms of spots, yesterday domestic pp market quotation are increased dramatically, the price is around RMB 100 – 200 per ton. In terms of spots, the price of PP futures increased; part of petrochemical enterprise increased their ex-factory price of crude oil, which to certain extent it enhanced the support of market cost. Like wire drawing, today's mainstream of north China bid in RMB 8450-8650 per ton, east China mainstream quotation in RMB 8500-8700 per ton, south China mainstream quotation in RMB 8750-8900 per ton.
In general of the quotation, currently the moving average lines appear like long positions;MACD exposure is upward,but the red pillars shrinks, which suggest it does not have enough momentum to increase. Prices around RMB 8600-8700 are the cost base, which have high risk; we suggest double considering it before investors take any action.
Dong LV (Investment Certificate NO. TZ008452)