Daily Report 220915 2015-09-22
Macro Economy
Yesterday US stock market rallied after prior two days dropping. After the decision maker in Fed made a speech, investors held positive perspective to US domestic economy. S&P 500 index ended at increased 8.89 point or 0.45% to 1966.97 point. From data side, after July existing home sales creating high record since February 2007, US August existing home sales was 5.31 million pieces, decreased 4.8% on monthly basis, estimation was 1.6% decrease on monthly basis. Atlanta Federal Reserve Bank President Dennis Lockhart indicated on Monday that, though recent volatile market increased the risk on US economy and inflationary outlook, he still believed central bank would raise interest rate within this year. St. Louis Federal Reserve Bank President Bullard (non-voting member) regarded that now is the time to raise interest rate and, he supported to raise interest rate early and gradually. On European side, Tsipras and his Syriza had stood out in the eight-month-long Greek second election again; Syriza had defeated its allies, New Democracy with 35.5% vote, which New Democracy had 28.1% vote. Both parties will form a coalition government, which decreased the possibility of Greek defaulting in the new bailout agreement.
On domestic side, news from the Chinese government website claimed, central had passed opinion to implement market access negative list institution; from year 2015 to 2017, China would trial implementation on market access negative list institution in partial regions and, would nationwide officially implement from 2018. Chinese vice premier of the state council Ma Kai and Osborne co-chaired the seventh China-UK economic and financial conversation on this Monday, agree to conduct research on the possibility of establishing interconnection mechanism between London and Shanghai stock trading. After prior Shanghai-Hongkong stock connection, new Shanghai-London stock connect had been put on the agenda, which would positive impact future domestic stock market.
Monday overseas copper price got bolster in the falling trend. Yesterday published data showed, China August import refined copper increased 12% to 263,000 tons on yearly basis, main reason was global copper price fell over domestic’s which stimulating imports. Copper concentrate import as well increased 20%. Positive China trade data boosted the copper price but, market was not very optimistic on continuing improvement of demand in China and, US dollar went strong, copper price increase trend got limitation.
ICSG monthly report indicated supply of global refined copper market had transferred from shortage 43,000 tons in May to surplus 2000 tons in June; supply of refined copper in the first half year was surplus 19,000 tons which had limited the increase trend to copper price. Thursday LME spots premium $12, inventory slightly increased 650 tons. Technically, copper price had rallied from the two-week low point, we recommend paying attention on effectiveness of five-day moving average system resistance in short term.
Soybean was volatile in weaken before two holidays; on one hand, there was factor as new grain came in to market. On another hand, price was dragged from weakened and slumped overseas market. Domestic soybean quoted at RMB 20-60/ton, under the impact of new grain and, market considered price would opened high then went low after new grain coming, market buying and selling momentum was thin in short term.
Soybean meal spots edged down, stock up before two holidays had ended. Inventory was strong in south and light in north in selling regions, quotation down to RMB 2680-2730/ton. Market still lacked of good news to boosting in short term, meals would continue volatile trend and seek direction to break through. Hold slight position and operated in short term before holidays.
Yesterday PP futures opened low and went high, opened at 7301 and ended at 7426; trading volume decreased 193,000 lots to 971,000 lots; holding decreased 19588 lots to 360,000 lots. In upstream, FOB Korea propylene decreased $2, average price was $593.5/ton. On spots side, yesterday domestic PP market was mainly in consolidation; price in partial regions slightly fluctuated RMB 50-100/ton. PP futures opened low then volatile rose which had limited boost to market, practitioner lacked of confidence to future market, market wait-and-see sentiment enhanced. Merchants mainly shipped with market trend and, plants in downstream purchased as own demand, firm offer most in negotiating.
Current main quoted prices for wires of north, east and south markets are RMB 7680-7800/ton, RMB 7800-7900/ton and RMB 7750-8000/ton, respectively.
As for operation, current moving average system gradually ranged in bearish as weaken tendency. But impact from crude oil and macro circumstance was uncertain; market was volatility. We recommend waiting-and-seeing.
                                                                           Dong LV (Investment Certificate NO. TZ008452)