Daily Report 131015 2015-10-13
Macro Economy
Among the overnight market, US bond market was closed for the holidays; US stock market raised for four continue days; retail shares rallied, Amazon raised to a record high; investors were waiting for the sign on US strong economy shown from enterprise financial results. S&P 500 index ended increase 2.56 point or 0.13% to 2017.46 point. Chicago fed President Evans reiterated, Fed should hold off interest rate hike to the middle of next year and, Fed fund rate was estimated to be bit lower than 1% in the end of 2016. Fed governor Brainard also indicated, risk from overseas has overshadowed the US economy prospect and, interest rate should not be raised too early.
From domestic side, Xinhua reported, CPC Central Committee Political Bureau convened a meeting on 12 September which study and formulate major issue on “13th Five Year Plan”, determined the Fifth Session of the Eighteenth Central Committee of the CPC would be convened from 26 October to 29 October. From data perspective, the amount of actual use of foreign capital in September is RMB 59.47 billion, increased 7.1% on yearly basis; from January to September increased 9% on yearly basis. FDI growth slowdown might reveal the condition of capital outflow still exist from a certain extent. In addition, China’s General Administration of Customs will issue September trade data on intraday 10 o’clock. From market expectation, export will decrease 6.0% on yearly basis; in August it decreased 5.5%. Import will decrease 16% on yearly basis, in August was 13.8%. Trade balances will surplus $48.21 billion, in August was surplus $60.24 billion. These data shall be focused on.
 
 
Copper
Monday domestic and overseas copper price slightly adjusted in high point. Most insiders are joining the LME week which starts from this week; market trading and investing momentum is thin. Crude oil slumped 5% which hammered the copper market, the main reason of dropped crude oil price was long holding profit-taking and the increased OPEC output. Back to copper market, Monday LME spots premium $13.75, inventory decreases 2025 tons. Domestic spots discount RMB 50 to level off. Copper industry negotiates on the issue of processing charge in the LME week; since mining suspends, some projects are postponed and output reduced, the processing charge in 2016 is estimated to be reduced. Current processing charge is 100.7 USD/ton and 10.7 cent/pound, insiders estimate the processing charge for clean mine will be 80 in 2016. Price in the future has different voices in the LME week and we will report it after arrangement. We tend to consider the volatile pattern still exist in recent copper market and, since the slumped period from May is too long and range is too large, the concern on Chinese economy and the issue on Glencore all prolong the adjustment for copper price. Relief from these two factors will continue the prolonged copper price adjustment.
Technically, recent copper price will fluctuant around the five-month moving average system $5320, the next resistance point is the recent high point 5440. We hold for the sign of copper price adjustment finish.


Soybean
Soybean No.1 contract continues weak trend; new bean quality in this year is worse than last year and the moisture is little higher, demand from terminal side is languished; new bean in south as well drops. Market generally believes spots will fall back in short term which exacerbates the market bearish expectation. Soybean spots in west Heilongjiang area drop to RMB 3900/ton, far below the domestic soybean and, hammer the domestic soybean to some extent. We also consider soybean NO.1 contract price will influenced by weakened spots in short term, the weaken midterm pattern is obviously, yet current 1601 contract has already dropped under RMB 3900/ton. From the cost of warehouse receipt side, market still level off spots, hence the risk of continue chasing shorten on futures side is out of proportion to its profit; the short holdings in high point before holidays can be further held, margin-hunting and long positions still need to wait.
Soybean meal market also fluctuates in low point; spots re-stocking after holidays have finished, price slight changes compare to the price before holiday. Since overseas market still has not got rid of low point volatility pattern and, domestic supply is sufficient, performance from terminal side is flat, DCE soybean will maintain volatile and resist dropping sentiment in a short term.
 
 
PP
Yesterday PP futures continued volatile, opened at 7397 and ended at 7388; trading volume decreased 349,000 lots to 588,000 lots; holding increased 768 lots to 306,000 lots. On spots side, yesterday domestic PP marker consolidated narrowly. PP futures run in high point which limited boosted the marker sentiment.  EXW from petrifaction maintain stable and bolster the market cost. Merchants shipped in market price and observed market reaction. Centralized procurement from downstream came to a conclusion, initiative receiving reduced; market trading and investing momentum turned to thin.
Current main quoted prices for wires of north, east and south markets are RMB 7400-7500/ton, RMB 7700-7800/ton and RMB 7800-8050/ton, respectively.
As for operation side, though current five-day moving average system turned to upward, it got resistance at forty-day moving average system. It was likely continue fluctuation and we recommend waiting and seeing.
 
 
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