Daily Report 180915 2015-09-18
Macro Economy
Yesterday US stock market ended low, Fed maintained interest rate near zero which exacerbated concern on global economy. S&P 500 index ended down 5.11 point or 0.26% to 1990.2 point. As for data perspective, last week initial jobless claims decreased 11,000 to 264,000, created a two-month low. August housing start decreased 3.0% at 113,000 pieces on an annualized basis, lower the market estimation but, US real estate market tendency still maintained. On yesterday Fed conference, FOMC decided to remain the near zero interest rate since 2008 and, claimed recent global economy and financial dynamic may restrain economic activity, which would probably hammer the recent inflation. Yellen indicated that there was chance to raise interest rate in October, in each conference, would not wait to accomplish employment and inflation aim to start easing policy. Overall, this Fed meeting was slightly dovish, though it emphasized the possibility of raising interests in October, seemed it was hard to have large changes on economy within one month and was not enough to launch raise interest policy. After the news, gold and US Treasury bond soared and US index slumped. US interest rate raise postpone would decreased hammer on commodity market but, under fundamental factors as weakened global economy, entire commodity rally scope was limited for short-term. In addition, China’s national bureau of statistics would publish August residential sales price for 70 big-middle scale cities on 9:30 this morning, it was estimated the amount for new housing price accomplishing monthly basis raise would over the 31 cities in July, which shall pay attention on.

Thursday copper price narrowly fluctuated in high point, market was waiting for the result from Fed. Fed meeting declared remain interest rate the same but, retained the possibility of raise interest in the end of year. Yellen indicated the concern on global economy especially developing country economy as China; which highlighted difficulty in current China economy. Thursday LME spots premium was $15.5, inventory decreased 1800 tons. Domestic spots premium was RMB 20-70, but consumer buying market was not positive. Weakened domestic consumption was still the biggest hammer on market, current real estate, automobile, air-condition was forced to cut inventories; China consumer market was hard to say in optimistic. Latest news, Thursday earthquake in Chile only caused to a temporary halt on copper production, current all lines had back to normal.
Technically, LME resistance was $5440, possibility of fall back increased in short term; resistance RMB 41500 in domestic was as well clear. We recommend operating bearish in short term.
Overnight US soybean edged down under the influence of concerns on China future purchase slow down. Current market lacked of substantiality guidance, tendency was uncertain. Market was waiting for inventory report in the end of month and October supply and demand report; weather in next two weeks was ideally and early frost was unlikely to happen, per unit area yield on early beans was good. Chinese delegation visit America will contract millions of tons of soybean, which had already become a routine in each year. Market was focusing on the October supply and demand report, data on sown area and yield would further adjust; in the period of alternated new and stale grain, market hold wait-and-see attitude to future price variation and, new grain was possibly opened up high and went low. New grain came into market in small quantity in partial Heilongjiang region, early bean purchase 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 opened up high than went low, opened up 7500 and ended at 7343; trading volume increased 60960 lots to 1.043 million lots; holding increased 48228 lots to 399,000 lots. In upstream, FOB Korea propylene decreased $10, average price was $620.5/ton. On spots side, yesterday domestic PP market temporally stabilized; partial regions slightly high quoted about RMB 50/ton. Overnight oil price rallied, futures opened up high boosted practitioners’ confidence, but price volatile decreased in mid market exacerbated the observing momentum. Demand in downstream moderately purchase, firm offer stock was still in cautious; trading volume was weak. Since market had sluggish for a long time, short term bullish was hard to bolster the market, overall wait-and-see momentum was thin.
Current main quoted prices for wires of north, east and south markets are RMB 7650-7800/ton, RMB 7800-8050/ton and RMB 7750-8100/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)