Daily Report 160715 2015-07-16
Macro Economy
Yesterday U.S. stock market nearly flatted and stopped the four-day-raising trend; Fed President Yellen implied rate rising is in the process. S&P500 index closing slightly fell 1.55 point or 0.07% to 2107.4 point. Fed Beige Book revealed the different performance from consumption and expenditure and respondents were losing optimism; U.S. economy further expanding from mid May to end June. For data perspective, compared to last month, June industrial output value grew 0.3% and over the expectation; PPI raised 0.4%. Inflation already hit the bottom, current employment, consumption and commodity price cannot make it further dropping, and it may begin the inflation mid-term rally. Overall, Fed will raise interest rate in this year and the possibility in September and December is half-half, U.S. dollar will maintain in high point. In Euro, Greek parliament passed austerity reform measure, Dombrovskis – VP of the European commission indicated that European Union proposed EFSM would provide €7 billion and 3-month-long Bridge financing. The Greek debt crisis got preliminarily solved but, there would be lot amounts of loans or debt expiring in the second half year, €9 billion before September and the disturbance to market would be hard to avoid.
As for domestic side, yesterday data revealed that June China industrial added value actual increased 6.8% on year to year base; fixed asset investments in first half year was 11.4% and flatted with January to May, investment in real estate development fell again to 4.6%; retail sales of consumer goods rallied to 10.6%. Second quarter GDP increased 7% on year to year base. Overall, real estate market plainly revolve in Q2 but, consumption increasing did not stimulate investment yet, consumption of E- business grew rapidly; rebounding in industry-level still rely on traditional industries under stimulating policy; new industrial growth was not plainly and structural transformation was not sufficient. It is predicted easing policy will continue, especially on directional policy adopted to solve structure problem.
 
 
Stock Index
Yesterday stock index slumped, prior days over rallied and index was lacking of capacity to continuously rebounding - just as we emphasized; hence this was a normal falling. In prediction, market seems not likely to believe in prior stories and new ones are still on the way, there is no special bullish or new expectation currently. Besides, investors suffered great losses previously, funds and confidences got duplicate hammer which would not revolve in a short time. Technically, rebounding trend lacked of continuity, it was normal to fall back. Current futures discount is large, corresponding the further dropping momentum from down to limit shares, reflect to the bearish prediction. There is inertial dropping in as short time but it will be hard to fall back the prior low point.

 
Copper
Wednesday copper price soared then went low, closing at slightly fell. Intraday U.S. dollar went high hammered copper price. U.S. PPI rose over expectation; in addition, Fed president Yellen indicated again would raise rate in the end of year during semiannual testimony of House of Representatives, which extremely higher the expectation of rate raising in September; intraday U.S. economy report revealed the economy is gradually reviving. We considered the view from Yellen was same as before, there might still exited fluctuation on rate rising time point, pay attention on current U.S. dollar interest rate. As for fundamental side, LME spots discount $12.5, inventories decrease 675 tons. Domestic spots in the discount trend, it is predicted would premium again after intraday month changes. Unexecuted orders from State Grid Corporation of China will execute in the second half year, which turns copper consumption in second half year much better, and considering of asset settle down, majority projects will start operation, China copper consumption will be better than prior two months.
Technically, copper price still fluctuant in the scope, we insist copper price is in the rebounding trend; we recommend focus on bolster at $5500 and RMB 39,500 in short period. As for operation, tend to long positions but control on the short-term risk.
 
 
Soybean
Soybean price fell in night session, dragged from U.S. soybean dropping; soybean No.1 contract spots continue weak trend, northeast soybean shipment is not optimistic, especially consumption for soybean food dropped for years. Market is under a pessimistic mindset, hammered from weak demand of soybean protein and soybean food, domestic tendency is hard to revive in a short time.
Soybean meal continuously retraced for two days, recent rising is too rapid, driven the terminal purchasing and the firmly spots, bullish trend of domestic market is mainly on cost of transmission type; as for spots side, the unexecuted contract is comparatively more in north area, temporally there is no hammer on oil plant, and no inventory pressure on oil plant; the short period price tends to raise. There is certain inventory in east China and south China and the price is in slightly weak. Since overseas market is strong, domestic spot is firm; soybean meal retracement is limited in a short time. We recommend gradually take slight long positions as for operation.
 
 
PP
Yesterday PP futures opened up high and went lower, opened at 8300 and ended at 8226, trading volume decreases 49610 lots to 303,000 lots, holding increases 1820 lots to 277,000 lots. In upstream, FOB Korea propylene price is flat, average price is $855.5. As for device side, since devices as Haitian petrifaction stopped operation for overhaul, the operation rate was lower than prior period. As for spots side, yesterday domestic PP market slightly volatile, price in Yuyao and Xiamen loosen slightly. Futures price is fluctuant falling and is hard to boost the market. Merchants shipped optimistic, downstream purchase mindset had no plainly variation, investing and trading was thin, difficulty in trading at high points.
Main quoted wires prices of north, east and south markets are RMB 8100-8250/ton, RMB 8350-8600/ton and RMB 8350-8550/ton, respectively.
As for operation, current moving average system formed bearish trend and it was highly possibility of further weakening.

 
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