Daily Report 180615 2015-06-18
Macro Economy
Yesterday U.S. stock market soared, Fed states they will increase the interest rate step by step and Ms. Yellen expected to see more conclusive economy growth evidence; S&P 500 index ended increasing 4.15point or 0.2%, backed above 2100point and reached 2100.44. On yesterday FOMC meeting, Fed announced will remain benchmark rate will increase the evaluation to U.S. employment market and economy; Jannet Yellen indicated a certain possibility of rate rising in this year, rising opportunity will depend on actual data in future months, it will be progressively increased. Among the announcement after meeting, Fed shows optimistic emotion on employment, considers the main cause of previous inflation weaken – energy price is stabilized. As the Fed officers’ interest rate prediction perspective, there will be one to two 25point-rate raise within this year. After the announcement U.S. dollar decreased, U.S. stock soared and gold increased.
On the whole, Fed is continuing postpone the prediction of first rate rising time, possibility of rising in Sep declined, but still need more observe data- especially inflation reviving level in Q3 to make judgment. On Euro side, Greek president Tsipras claimed he was ready to take the responsibility of rejecting creditors inequity agreement; Eurogroup Chairman Dijsselbloem thought European Union shall get well prepared about any possibilities and, already informed Greek cannot accomplish the agreement in last day. After the end of this month Greek crisis will remain, pay attention on the Euro zone finance ministers' meeting in 18 June.
Wednesday domestic and overseas copper investing and trading was thin, copper price fluctuant in low position, waited for result from Fed meeting. If interest rate remains the same as expected in Fed meeting, implying rate will raise in this year. Current matter is rate rising once or twice. Ms. Yellen is trying to dilute the focus on rate rising time point and emphasize evolutionary policy to tighten rhythm. Considering recent U.S. data was optimistic, if CPI data revived in Wednesday there will be a huge possibility rate rising in September. Greek situation still not optimistic; Greek Central Bank warned in Wednesday, if Greek government cannot accomplish an assistance agreement with creditors, Greek will have to face painfully default and exit Euro destiny. It is worthy attention on Thursday Euro Central Bank meeting. In short period refer to whether U.S. dollar index rallies.
As for fundamental side, LME spots premium dive from $29.5 to $18, inventory decreases 500tons, domestic copper spots premium slightly increase to RMB140-200; as for spots market mainly on the speculator, though the consumer purchasing increased it’s not plainly. Recently copper price rapidly decreases, on the futures option market, major holdings are focus on $5800 and $5500, recent copper price decreases $5800; we consider copper price will continue downward to $5500. Domestic copper price fell through RMB42,000 and continuing downward to RMB40,000. We recommend continue holding short positions as for operation.

The downward trend has been eased after soybean No.1 contact fell through RMB4200, we consider a limitation below RMB4200 in futures operation side. Though current market held large divergence in future price, factors as spots firmly and future surplus grain decreased, soybean output in new season did not reach the expectation did not bolster a continuing downward trend.  It is predicted market will remain width fluctuation in a short period; short positions may take profits under RMB4200.
Soybean meal spots in majority areas increase RMB20-50/ton, large inventory divergence exists among different areas; downstream purchase revives; oil plant operating rates is high; sell operation side, crush margins losses and U.S. market revives will drive a short period rebounding trend in sell operations. As for operation, we recommend previous soybean meal short positions can be reduced appropriately.
Yesterday PP futures opened up low and went lower, opened up at RMB8571, ended up at RMB8454, trading volume decreased 233,000lots to 473,000lots, holdings decreased 46,762lots to 443,000lots. PP price flats in upstream side. As for device side, Yanchang PC malfunctions and stopped production but, the influence to overall supply was limited. On the spots perspective, yesterday domestic PP market partial slightly volatile, price in portion of areas decreased RMB50/ton. Under the bolster from majority petrifaction price stabilized, merchants surrender profits space was limited but, Sinopec Central China quotation lower RMB100/ton, which caused decreasing concern to the market. Partial merchant with more commodities following the downward trend making shipment; downstream demand continue buy as required, lacking of stock aspiration and trading in firm offer following insufficiently.
For instance of wires, main quoted prices of north, east and south markets are RMB 8600-8750/ton, RMB 8900-9100/ton and RMB 8900-9100/ton, respectively.
For operation strategy: currently price fell again, MACD red-column shortens as retracement trend. Currently PP lacking of speculate momentum, it is predicted a high possibility of continuing volatile.
                                                 Dong LV (Investment Certificate NO. TZ008452)