Daily Report 161115 2015-11-16
Last week copper price dropped below the resistance line, price fluctuated at low point in the weekend. On macro side, the US strong employment data and several Fed officials declared that support on interest rate hike in the end of this year, which boost the US strong dollar and hammered the copper price. US October retail sales failed to meet expectations in the weekend but, did not make impact on the expectation of interest rate hike in the end of year. In addition, French was rocked by terrorist attack in the weekend which might trigger safe-haven demand, strong US dollar would continue. Euro Zone third quarter GDP failed to meet the expectation, market expected ECB would further easing policy in December. On fundamental side, LME spots premium sharply decreased $8.5 to $3.75, total inventories in three main exchange decreased 3868 tons, including SHFE decreased 395 tons, LME decreased 8500 tons, COMEX increased 5027 tons. On supply perspective, Congo third quarter copper yield was 252,000 tons, decreased 8% year-on-year; main reason was the broken power supply and the low copper price. Yield in 2015 was estimated to decrease 55,000 tons to 980,000 tons. Poland KGHM appealed for cut down domestic mining tax and, planned to shut down the Sierra Gorda copper mine in Chile which the yield in prior three quarters was 60,000 tons. Technically, copper price downturn scope opens after fall through the triangle; LME target is $4600, domestic copper is RMB 35000. Keep holding shorten as for operation.

DCE soybean saw divergence; soybean No.1 contract in the rallying trend, range though not plainly, under the boosting of spots price stopped losing, the bolster at below point was strong. Soybean spots in northeast region were stabilizing; most purchase price was at RMB 3800/ton; since the peasants were still reluctant to sell out, soybean price in north China further rallied. Spots in Anhui region had rallied above RMB 4120/ton which mainly caused from the purchase difficulty from primary level. Under the boost from spots stop losing, DCE soybean was predicted to stabilize in a short term; DCE soybean No.1605 contact bolster line was 3800.
Soybean meal spots were slightly dropped in most regions, quotation maintain from RMB 2540/ ton to RMB 2600/ton; overall market sentiment was weak, port soybean inventory was still raising and, port arrival amount in the next two months was predicted at 7 million tons. Oil against meal ratio was 2.20:1, the rate to peak in short-term. As for operation, soybean No.1 contract may reference the bolster line and try the long holdings in light; arbitrage holdings between long oil and short meal stopped profit temporally and stay in observing.
Last week PP futures continue downward trend. In upstream side, up to Friday night, FOB Korea propylene average price was $584.5/ton. On device side, current operation ratio was 89.5%, slightly lower than prior week. On spots side, PP market price was further dropping in this week. Petrifaction continued reducing price, market was in pessimistic sentiment, and merchant confidence was insufficient and shipped following the downtrend. Plants in downstream purchase as demand, no plainly stock up demand, trading in firm offer were difficult.
Current main quoted prices for wires of north, east and south markets are RMB 6450-6500/ton, RMB 6500-6600/ton and RMB 6800-7000/ton, respectively.
As for operation, current moving average system arranged in short, MACD green column extended as weak pattern; recent price was estimated to continue weakening.
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