Daily Report 141015 2015-10-14
Macro Economy
Yesterday US stock market ended low; the weakened Chinese import data dragged Industrial stocks and, exacerbated the selling pressure on biological technology stocks. S&P 500 index dropped from the seven-week high point, ended down 13.77 point or 0.68% to 2003.69 point. Fed governor Tarullo indicated during the CNBC interview, interest rate hike was not supported within this year. This made him and another governor Brainard who appealed for keeping patience on Monday both in the dove and, against with the camp including President Yellen, Vice Chairman Fischer and New York fed President Dudley who supported interest rate hike in this year. St. Louis fed president Bullard indicated, Fed will continue easing policy after interest rate hiked; US unemployment rate might come to 4%. On European side, ZEW indicated, German October investors and analysts' expectations index dived from 12.1 in September to 1.9 for a seven-month continue dropping, and it was far below the expected 6.5. UK September consumer price dropped 0.1% on yearly basis, inflation ratio for the second time fell to negative value from 1960; the expectation of central bank prolong interest rate hike had enhance.
From domestic side, China customs data revealed, in dollar terms September export decreased 3.7% on yearly basis, import decreased 20.4% and, trade surplus was $60.34 billion which reached the second highest level on record. We regarded the Chinese September export had improved; decrease range was reduced; yet the import decrease range was extending cause of the sluggish demand and, slumped crude oil, iron ore and other commodities; devaluated RMB as well impacted on net export increase. Export is estimated to weak rally in late period; import is hard to have plainly improve in short term since the weakened domestic demand; more stabilizing growth need to be practiced; the trade surplus will maintain at high level. In addition, China's National Bureau of Statistics will issue September inflation data on intraday 9:00. CPI is expected to increase 1.8% on yearly basis, in August is 2%. PPI is expected to decrease 5.9% on yearly basis which level off August data. Pay attention on this data.
Stock Index
Intraday stock index slightly fluctuated; IC edged up, Shenwan first grade sector was mixed with increase and decease; concept stock was in better performance. From capital perspective, current position for institution is rather low; deleverage from stock market is almost done, private placement initiatively make long holdings. Leverage start to rally under market volume and price upward trend, margin trading balance has continuously increase for three days with accumulated increase RMB 41 billion. Market risk appetite increased. From the expectation side, stabilizing growth and state-owned enterprise reform as well has its own value; the Fifth Session of the CPC in the near future will bring new hope to the market. Overall bullish factor held a larger space and it was about the time to revive. But just as shown from the slumped 17% import data, there is no sign for domestic economy improve; revive lacks of persisted motivation, we recommend be wary of the dropping from high point. IF resistance is 3600 in the short revive trend.

Tuesday copper price adjusted in high point; market held large divergence near $5300. On macro side, global economy is still in weakness; after Chinese import slumped, German economy expectations as well sharply dropped; expectation on US raise interest rate in the end of the year continue decreasing. For the copper price, the crucial point is economy growth which will impact the copper consumption. On fundamental side, LME spots premium slightly increase to $14.75, inventory decreases 2600 tons. Domestic spots discount RMB 50 to premium RMB 20. The ongoing LME week is still the market focus; from the meeting, the possibility of Codelco adjust recent output is low; Freeport indicate will determined by the market condition, which has indicated in August would reduce 68,000 tons output for the next two years; but it will be made under the circumstance of boosted sales, the original plan was copper sales volume increase 29% or 540,000 tons in 2016. Chinese copper consumption slows down is a growing trend. We tend to regard copper price is hard to get rid of weak trend. The short-term copper price is in adjustment, we are waiting for the sign of the end.
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, recent rally still can be considered of a rebound from weak trend.
Soybean market as well fluctuated in weak pattern, 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.
Yesterday PP futures fluctuated in low point; opened at 7300 and ended at 7292; trading volume increased 17100 lots to 605,000 lots; holding decreased 5982 lots to 300,000 lots. In upstream side, FOB Korea propylene increased $35; average price was $530/ton. On spots side, yesterday domestic PP market was in weaken adjustment. Overnight oil price slumped which weakened the bolster to market cost, in addition with PP futures run in low point had hammered the receiving demand from downstream. Merchants lacked of initiative to purchase and observed market reaction. Plants in downstream observed in cautious, firm offer was weak
Current main quoted prices for wires of north, east and south markets are RMB 7370-7600/ton, RMB 7600-7800/ton and RMB 7650-8010/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. In addition with current crude oil influence was indefinite, it was likely continue fluctuation and we recommend waiting and seeing.
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