Daily Report 210915 2015-09-21
Macro Economy
Last Friday US stock market slumped, S&P500 index ended at down 32.21 point or 1.61% to 1958.08 point, fell back last week increased point; warning from Fed to global economic outlook spread to entire financial market. Data from US Department of Labor revealed that, August employment increased in 32 states and, unemployment rate decreased in 29 states. US August leading economic indicator increased 0.1%, anticipation was 0.2%. John Williams, president of the San Francisco Fed reiterated, Fed was predicted to raise interest rate within this year. Jeffrey Lacker, president of the Richmond Fed released claims, he voted against decision from most of the members in FOMC, that it was necessary to increase interest rate. James Bullard, president of the St. Louis Fed indicated, he opposed to the decision of prolong rate raising timing which Fed made in this week and, if there was just causes Fed would prepare to raise interest in October. Overall, along with more complex global economical situation, attitude on raising interests and the divergence from interior was further expanding in Fed; interest rate was possibly to rise in December currently but, Fed policy would have corresponding adjustment if other factors had variations. On European side, one exit poll showed, Tsipras was high likely to return to power in Greece; his Syriza in Greece was in sight to win in the second election. If Tsipras won in this election, Greece was certain to continue performing prior bailout agreement and, the possibility of another crisis in Greece was small.
From domestic side, news from the Chinese government website claimed, Premier State Council Li Keqiang chaired a meeting and required to drive merger and acquisition of enterprises; disposed enterprise running under deficit and Invalid inefficient assets; enhanced state-owned capital effectively and operating efficiency. Liu He, the deputy director from NDRC indicated that, next step is to combine the reform of electricity, petroleum, natural gas, railway, civil aviation, communication, military project and other sectors; to launch the pilot demonstration on mixed ownership reform from different fields. Various reform measures would continue driving industry transformation of the domestic economy, but result was hard to be seen in short term. In addition, Chinese President Xi Jinping will make his first visit to China in this week and, will arrive at Seattle on 22 September; head to Washington on 24 September; plan to convene joint press conference on 25 September, which shall be focused on.
Last Friday copper price slumped, LME decreased about 3% and, the main reason was concern on global economy. On fundamental side, last Friday LME spots premium increased to $18.5, domestic spots was discount RMB 10 to premium RMB 60. Inventories in three main exchanges decreased 2936 tons in last week; among which SHFE inventories increased 7003 tons, LME inventories decreased 6800 tons and COMEX inventories increased 1848 tons. Technically, LME resistance was $5300 and, if resistance effective, copper price would further down to $5100. Domestic copper price down to try RMB 40000, if this point broken through, copper price might further dropping to RMB 39000. We recommend furthering holding short holdings as for operation but, set the stop-profit point.

DCE beans all dropped on last Friday night session under the influence of slumped overseas market. Domestic new beans came into market in a small quant, early soybean purchase price was RMB 4200/ton, moisture at 15-16%; since moisture was at high level and amount was lacked, there was no trading volume temporary. Market held wait-and-see attitude on future variation price and, thought price was high possibility of opened high then went low after new grain coming into market, which made market buying and selling thin in short term.
Soybean meal was strong in stabilizing, stock up before two holidays ended; inventories was strong in south and light in north in selling regions, quotation was generally at RMB 2700-2750/ton. Market still lacked of good news for boosting in short term, meals might continue volatile trend and seek direction to break through. Hold slight position and operated in short term before holidays.
Last week PP futures fell with fluctuation. In upstream, FOB Korea propylene average price was $595.5/ton up to last Friday night. As for devices side, partial devices overhauled in prior started operating again, current operation ratio was 83% and was slight higher than last week. On spots side, domestic PP market price downward shifted, recent futures and crude oil both hammered market and practitioner sentiment was in shorten. Actual demand from downstream plants was flat and most stayed in observing; purchase in firm offer was limited, hammer on agency shipment was huge, phenomenon as trading in surrendering part profits was general. Though crude oil soared, confidence boosted from practitioners was limited; market stabilized temporary; trading and investing was stalemated.
Current main quoted prices for wires of north, east and south markets are RMB 7700-7750/ton, RMB 7750-8100/ton and RMB 7800-8100/ton, respectively.
As for operation, current moving average system gradually ranged as short, MACD dead fork gradually formed as weaken pattern. But impact from crude oil and macro circumstance was uncertain; we did not exclude the possibility of repeating market happened. We recommend stay in observing, activists may time the market.
                                                                          Dong LV (Investment Certificate NO. TZ008452)