Daily Report 170915 2015-09-17
Macro Economy
Yesterday US stock ended at the four-wee- high point under the stimulation from rallied energy stock and beer industry merger news. S&P 500 index raised 17.22 point or 0.87%, ended at 1955.31 point. As for data perspective, US September builder confidence index raised to ten-year-high level, which showed bolster to the economy in second half year from residential property uptrend. But August consumer price decreased 0.1% on monthly basis as the first time decrease since January. Euro Zone August consumer price increased 0.1% on yearly basis, lowest point from four months. Overall, this data revealed a fell phenomenon on inflation in Europe and America after reviving, which might caused by oil price dived; after September energy price rallied, inflation was estimated hard to further dropping. In addition, FOMC would outcome its policy meeting on 2AM, 18 September Beijing time and, would hold a press conference on 2:30AM. Current economic data held no brief for Fed raise interest rate, Fed funds futures as well showed probability of raise interest rate in this conference was only 28%; it was low probability for raising interest rate. Pay attention on this event.
On domestic side, China's Prime Minister Li Keqiang held executive meetings of the state council on 16 September, the meeting decided to expand favorable policy on accelerated depreciation for fixed assets; on the basis of original six industries as biological medicine and instrument manufacturing, it was predicted accelerated depreciation for fixed assets would expand four fields on light industry, textile, machinery, and automobile. This move would reduce tax for enterprises about RMB 5 billion. In addition, China had reduced $30.4 billion US Treasury bond to $ 1.24 trillion in July, created the biggest down range from November 2013. US Treasury bond reduction was for gaining US dollar in a particular level, to make sure RMB exchange rate stabilizing and, under present conditions, central bank would possibly continue reducing US Treasury bond.

Wednesday domestic and overseas copper price went high; China stock market soared strong bolstered the market. In addition, Wednesday US August CPI accidental slipped, further decreasing the anticipation on raising interest rate in the on-going Fed conference, which bolster the copper price. Latest news, intraday morning 6:54, magnitude 8.8 quaked in Chile; though there was no news on impact from copper mine, this certain bolster the copper price. Problems in supply perspective continue happened in this year, the latest one was Congo estimated to reduce annual copper output in 2015 to 870,000 – 90,000 tons; reduction of output was mainly caused of Glencore Xstrata suspended operation on Katanga copper mine. The initial production forecast in Congo was one and a half million tons and, continue reduced two times since August this year, variation of output plan up to 600,000 tons. Copper mine had large influence under electric power problems, which became a potential bolster to copper price.
Technically, LME up through the rallied high point $5434, short-term resistance was five-month moving average system $5517. Domestic copper resistance was ten-month moving average system RMB 41700. We recommend waiting for Fed conference as for operation.

Soybean No.1 contract was fluctuated; in the period of alternated new and stale grain, market held wait-and-see attitude to varied price in the future and, mid-Autumn and National holiday was coming. Domestic soybean spots price fell back in most regions, delivery price in production regions general down RMB 20 – RMB 40/ton. New soybean came into market in small amount at Suihua and Zhangwei district in Heilongjiang; early bean purchased price was RMB 4200/ton, moisture was 15% - 16%; since moisture was high and lacked of amounts, there was no trading for now.
Soybean meal spots were stabilized, enthusiasm to stock up before two holidays decreased; hammer on inventories in north plants were light and spots were tight; hammer on inventories in south plants were huge, trading was thin. Recent overseas market went strong certain boosted DCE soybean meal but, global oversupply circumstance had no changes; soybean meal short-term tendency would rely on if US soybean breaking up 900 cents. We recommend holding light positions in short-term before holidays as for operation.
Yesterday market continued volatile, opened at 7490 and ended at 7436; trading volume increased 177,000 lots to 982,000 lots; holding increased 14280 lots to 351,000 lots. In upstream, FOB Korea propylene decreased $10, average price was $630.5/ton. On spots side, yesterday domestic PP market price continue dropping; wires decreased RMB 50-100/ton. Futures went low and receiving from downstream plants were limited, mindset from practitioners were bearish. Enterprises in petrifaction south China reduced EXW and bolster to costs weakened; most markets quotation went low, trading volume failed to rise.
Current main quoted prices for wires of north, east and south markets are RMB 7700-7800/ton, RMB 7750-8000/ton and RMB 7800-8000/ton, respectively.
As for operation, current moving average system gradually ranged as short, yet direction on crude oil and macro side was uncertain, we recommend operating in cautious and giving first place to observe.
                                                                                          Dong LV (Investment Certificate NO. TZ008452)