Daily Report 290615 2015-06-29
Macro Economy
Saturday evening the People's Bank of China stated to reduce interest rates 0.25% from 28 June, meanwhile oriented reduce deposit reserve ratio 0.5%, this is the fourth interest rate reducing from last November and, benchmark lending rate reduced to a record low. Measure as oriented reduces deposit reserve ratio accords with our expectation; meanwhile action of reducing rates indicates central bank would like to reduce long cycle interest rate. In addition, market participants considering recent stock market slumping is also a crucial reason urge central bank to reduce both rates and deposit reverse. This reducing deposit reserve released liquidity near RMB 400billion and, central bank continued MLF at RMB 130billison in 26 June; processed reverse repo in last week; we predict central bank will have further action on directional controlling.

Last week domestic and overseas copper market met bolster in low position, copper price fluctuant in low and slightly rally in the weekend. On macro side, last week markets focus on Greek debt negotiation, newest information is Greek announced will declare referendum in 5 July; negotiation from both side of credit and debt failed again which means lost the last chance; Greek announced starting capital restriction from this Monday; Euro zone declined the requirement of one more month bailout extension; whether Greek would factuality default in this Tuesday will be the focus; Monday U.S. dollar and gold soared enlarger the market hedging demand. China central bank stated reducing rates and oriented reducing deposit reserve ratio, strong intention for bailout as well for resisting Greek crisis; showed a large risk on macro side.
As for fundamental side, LME spots premium sharply decrease to $10, last week inventories decrease 7400tons. Domestic spots premium at RMB 240-290, inventories decrease 12,000tons, forms a tension aspect in domestic supplying, import window opened. The latest news is First Quantum advance daily output of Kansashi smelting plant in Zambia to 3000tons and, will reach the output in advance; the new Sentinel copper mine will also achieve commercialized production in Q3. CFTC indicated large positions added in shorten last week and short holdings gradually come in to a bearish situation. Technically, copper price still fluctuant in the low section, only LME rise above $5830 the rebounding scope will open. Domestic copper resistance is RMB 42,400. We recommend wait for a clear trend of copper price as for operation.
Soybean No.1 contract fell back after interim rally, spots price in northeast area start dropping; temperature rose, enterprises reduced the purchase price and the South lacked of demands, made the short-period tendency came into adjustment situation;  we predict the weaken operation tendency may continue for a while. 
Soybean meal rallied following the buying market, spot price rallied in this week and trading volume was better than last week; but affected by larger port arrival amount in this month, market further considering the hammer from supply side; recent soybean meal maintain increasing after the U.S. market, there was strong dependency of this rebounding trend; need to pay attention on the performance of U.S. market after report.
As for operation, we recommend slightly and progressively holding soybean meal in long positions.
Last week PP futures rise with volatile. In upstream side, FOB Korea PP average price is $958.8/ton. As for device perspective, currently operation rate is around 82%, lower than prior rate. On spots side, last week piece continues adjustment in weaken. Datang and Oriental Energy start selling; market supply side bear pressure and demand of downstream plant tepid, market price continues dropping and petrifaction ex-factory reduced passively. Futures price rallied near weekend which booming up participators’ mindset; partial merchant were more willing to open positions, but mainly on short-term. Downstream plants purchase appropriately, the investing and trading turns better. As for operation perspective, price broke through the moving average system, MACD red column expanded as an upward trend.

                                                               Dong LV (Investment Certificate NO. TZ008452)