Daily Report 271015 2015-10-27
Macro Economy
Yesterday US stock main index ended low; since the corporate performance report was coming to an end and, the Fed policy meeting was approaching. S&P 500 index fluctuated within the day; ended down from nine-month high point, dropped 3.97 point or 0.19% to 2071.18 point. US September new housing sales decreased 11.5% month-on-month to the lowest level from last November; estimation was down 0.6%. Reviving on real estate market temporarily cooled off again. On Euro side, German October IFO index decreased from September 108.5 to 108.2, as the first drop from four months. We considered the economy reviving in Euro Zone still lacked of endogenous momentum; external factors and price from commodities as well disturbed the inflation; Euro Zone another round of easing was imperative.
On domestic side, NDRC reported, September nationwide railway volume was deceased 15.6% year-on-year; from January to September was decreased 11.4% year-on-year. Huang Yi, the member of monetary policy committee of PBOC claimed, there should be a scope for monetary policy further easing within this year; GDP growth in next year might decrease to 6.6%, the inflation risk at this moment was huge. We considered, for the moment, the real estate investment - the crucial momentum for stimulating investments still did not show reviving; the expectation on economy stabilizing in short term might prolong or even fell through. Under the circumstance of lacked growth momentum in long-term, there was still distance to bottom in long-term.
Monday domestic and overseas copper market trading and investing momentum was thin; copper price slightly volatile. From market perspective, copper price had slightly revived in the early market but, along with crude oil price dropped, copper price as well lacked of revive momentum. From macro side, recent global economy performance was weak; countries led by China had reappeared easing policies which bolster the market. In addition, Monday US new house sales had down to the lowest level from one year; market held reserved attitude for Fed meeting in today and tomorrow, market generally considered US would not increase interests; the focus was on whether there would be sign for increasing interest in December. Overall, global economy was weaken, crucial countries easing again showed bolster. On fundamental side, LME copper price weaken, inventory slightly increased 350 ton. Domestic spots as well in weaken, Monday discount extended to discount RMB 60 to premium RMB 20. Since weakened copper price, recent news on copper mine declared reduction of output or investment was continuously. Monday CODELCO declared reduced five year investment plan from 2015 to 2019, reduced from $25 billion to around $21 – 22 billion. But the oversupply reality and insufficient demand was still the hammer to market. Technically, recent copper price was still under fluctuation and, got bolster at midline; this situation was estimated to be continuing in short term. We further waiting for the sign on the end of cooper reviving trend.

Soybean spots in northeast area continued dropping intraday, quotation generally at RMB 3800-3860/ton; purchase at terminal side mainly in observing and, the lower price in north China had made the spots export sales in northeast worse. It was predicted slow digested new grain would extend the sales cycle, soybean No.1 contract was predicted to maintain weaken in low point pattern.
Soybean meal spots reduced price in most areas, current quotation generally among RMB 2700-2750/ton, current port oil plant operation ratio was at regular level, inventory was in increase momentum; hammer from supply side to market further increased and, recent grease was stronger than meal, made domestic meal price fell through prior low. After price up through 2600, keep reverse weak mindset. As for operation, we recommend holing shorten in light positions for soybean No.1 contract; long in grease and shorten in meal.
Yesterday PP futures opened up low and went lower, opened at 7059 and ended at 6984; trading volume was 70338 lots to 1.004 million lots; holding increased 22216 lots to 400,000 lots. On spots side, yesterday domestic PP market price was in downturn. PP futures opened low and went lower sharply hammered the market sentiment. EXW from partial petrifaction region reduced which further weakened the bolster to market cost. Merchant shipped initiatively, sales in surrendering part of the profits. Plants in downstream was afraid to receive rashly, the reserved sentiment exacerbated.
Current main quoted prices for wires of north, east and south markets are RMB 6950-7150/ton, RMB 7050-7300/ton and RMB 7300-7450/ton, respectively.
As for operation, moving average system still arranged in shorten as weak pattern; recent price was predicted to be volatile to weaken.
Dong LV (Investment Certificate NO. TZ008452)