Daily Report 201015 2015-10-20
Macro Economy
Yesterday economy data revealed, Chinese third quarter GCP increased to 6.9% year-on-year; it was higher than the expected 6.8% but still lower the 7% growth in the second quarter; it was the lowest growth from 2009. September global fiscal revenue increased 9.4% year-on-year, rallied from prior value 6.2%; fiscal expenditure soared 26.9% year-on-year, the growth created record high from five months. Above-scale industrial added value was 5.7% year-on-year and was lower the expectation. Saleable area of commodity units increased 0.3% compared to last eight months, growth rate of sales volume leveled off prior eight months; among which September residential sales increased 15.6% year-on-year, sharply dropped from the 31.5% growth in August. Development investment growth slowed to 2.6%, Area of land acquisition in development enterprise decreased 33.8% and exceeded prior eight months, land transaction price decreased 27.5% revealed the aspiration on landing from developers was poor. The prior three quarters’ fixed investment growth slipped to 10.3%; September retail sales of consumer goods increased 10.9% year-on-year, surveyed unemployment rate increased to 5.2%. From data perspective, GDP growth was exceeded the expectation; fiscal revenue and retail sales of consumer goods were bullish; industrial added value, residential sales, fixed investment was poor; which revealed the traditional industrial sector were still in downward, consumers were good but hard to bolster the economy; the temporary stabilization in real estate was about to end, be wary of it. Yet to increase fiscal expenditure was still based on driving infrastructure and stabilizing the economy, the possibility of decreasing reserves and interests still exist.
Monday domestic and overseas copper price dropped, Chinese weakened economy data hammered the copper price. Back to the copper market, Monday LME spots premium sharply decreased from $18.5 to $2.5, inventory turned into increase 625 tons. Domestic spots were discount RMB 60 to premium RMB10. Performance of spots market had fell back. The third quarter performance report started released, the latest data revealed, copper output from Vale in the third quarter was 99,000 tons, decreased 5.3% year-on-year; the main reason was Sudbury had closed on the overhaul plan. From prior three quarters in this year, Vale total copper output was 311,000 tons, increased 13.5% year-on-year. Subordinate Salobo cooper mine 5180/20 would accomplish full capacity production in the fourth quarter. Technically, copper price was still fluctuated in low point; we focused on the effectiveness from bolster of weekly moving average system closed to $0. In domestic focused on the effectiveness from January copper at RMB 39000.

Domestic soybean spots were in stabilizing, soybean spots revived; spots in northeast stopped decrease; domestic market would still in sluggish demand period in short term; Soybean No.1 contract predicted to continue weak pattern in short term.
Soybean meal market edged up in partial area, current quotation was around RMB 2750-2820/ton, recent US soybean retracement and good basis sales in forward made the price in the dilemma of increase and decrease, but global oversupply pattern still maintained, the altitude and strength of DCE soybean meal reviving in short-term still rely on sales rhythm from oil plants and the further performance from US soybean. As for operation, we recommend holding soybean NO.1 contract in shorten at high; holding soybean meal in long at light positions.
Natural Rubber
Yesterday Shanghai rubber led the downside among domestic commodities, US dollar spots price edged down: domestic spots price 1270-1290 (-10), domestic cargo price 1290-1310 (-10), US RSS spots price 1350-1360 (0), US RSS cargo price 1340-1360 (-10), Singapore cargo price 1320-1340 (-10). On news side: yesterday released Chinese third quarter GDP increased 6.9% year-on-year; the first time broke though 7 from six years; fixed investment growth also slowed down; internationally still focus on the speech from Fed president. Overall: Fundamental of Shanghai rubber in oversupply had no changes, the poor macro economy data would be a procedure of financial market risk release in short term; pay attention on whether the expectation from monetary and fiscal policy would bring the chance to play a policy game.
Yesterday PP futures opened up low and went lower, opened at 7152 and ended at 7098; trading volume decreased 47084 lots to 722,000 lots; holding increased 16198 lots to 353,000 lots. On spots side, intraday domestic PP market continued volatile downward trend. PP futures run in low point continued hammer market sentiment. EXW from partial petrifaction regions reduced, which further weakened the bolster to market costs. Merchant shipped initiatively; plants in downstream stayed in cautious, demand of initiative receiving was low; market trading and investing momentum was thin.
Current main quoted prices for wires of north, east and south markets are RMB 7100-7400/ton, RMB 7200-7550/ton and RMB 7500-7700/ton, respectively.
As for operation side, current moving average system arranged in short as weak pattern; it is high likely to continue weak volatile trend recently.

                                                                     Dong LV (Investment Certificate NO. TZ008452)