Daily Report 171115 2015-11-17
Monday domestic and overseas copper price slumped again, market trading and investing brisk up; short holdings started to close positions. On macro side, US Fed officer held more firm speech on interest rate hike at the end of this year; the possibility had increased over 70%. Meanwhile, expectation from ECB further easing by the end of the year was increasing; the strong US dollar became the direct hammer on the commodity market. On fundamental side, LME spots premium only $4, inventory decreased 3550 tons. Domestic spots were premium RMB 50 to RMB 120, under the condition of spot month and forward month differed by RMB 100, the premium would drop after transferring into forward month. There was still no sign on domestic consumer industry in optimistic, loose supply and insufficient consumer was still the largest hammer on the market. In addition, though recent news on copper yield reduction was incessantly, on supply side was still loose. The latest news, though Freeport declared part mine reduced or halted production, it still maintain the annual sales target at 1.86 million tons, increased 5% year-on-year. Not only so, the subordinated Morenci and Cerro Verde project was on the track, copper yield was predicted to increase 374,000 tons each year; the average copper yield from Morenci would exceed 408,000 tons each year in the next five years, which revealed global copper mine yield would keep increasing; hammer on copper fundamental side was still huge.
Technically, copper price would test bolster line in a short-term; short positions may take partial profit on operation. LME bolster line was $4600; domestic copper price was around RMB 35000.
Yesterday LME nickel slumped; ended at $9290/ton, its lowest intraday level was $9270/ton; holding edged up and trading volume sharply increased, might hit the prior low 9100. Shanghai nickel slumped followed LME price; ended at RMB 72140/ton, set new low level during intraday at RMB 72110/ton; holding sharply increased. Overnight USD index soared; US stock, oil price rallied; most European stocks rose; gold increase range narrowed. The core inflation in Euro Zone unexpectedly set a two year high which release the urgency from central bank easing. Since 16 November, Bank of Beijing and the other qualified financial institutions would reduce RMB reserve requirement ratio from 14.5% to 14%. From industry perspective, Morgan Stanley indicated would estimate reduce 3% of nickel price in long-term to $16,755/ton. China's National Bureau of Statistics released October nickel yield was 30984 tons, decreased 2.31% year-on-year; cumulative yield from January to October was 300848 tons, increased 12.96% year-on-year. As for operation, speculation on US dollar hike interest rate recurred; Shanghai nickel slumped and set the new low; the weaken trend was hard to change under the hammer from moving average system; the moving average system arranged in short; Shanghai nickel might continue weak fluctuation and hit 70000.
DCE soybean continued downward trend in the night session, soybean No.1 contract broke through the 3800 bolster line and turned to down trend. Soybean spots in northeast region stabilized, most purchased at RMB 3700/ton. Soybean price in North China further rallying, the spots quotation had raised above RMB 4200/ton. But the upward trend from North China spots was too fast, the upward scope would be limited; Northeast spots were still sluggish, the hope would be on the demand on grains sent to the south. DCE soybean NO.1605 contract fell through 3800, price weakened again in short-term.
Soybean meal spots were mainly slightly dropped, quotation remained at RMB 2530-2580/ton; pig breeding stock revived slowly and weakened the demand on breeding; import soybean port arrival amount was huge and the import cost tend to decrease; domestic soybean meal supply was sufficient; rapeseed meal demand was in off season in the winter; the domestic meal market would continue weaken under the double hammer from supply and demand. Though the downturn from soybean meal slowed, the overall condition was still in the volatile downward trend. Oil against meal ratio was 2.20:1; it would be in the direction selection for a short-term. As for operation, stay in observing on soybean No.1 contract, arbitrage holdings between oil and meal take 2.2 ratio line as direction selection.
Natural Rubber
Shanghai rubber horizontally fluctuated over the past week, short positions prolongation made the calendar spread turned into back structure; speculative capital boomed on Monday which dragged the market price slumped again. Up to yesterday, domestic spots price is 1190-1210 (-10), domestic cargo price is 1190-1210 (-20), US dollar RSS spots price is 1210-1230 (-10), US dollar RSS cargo price is 1200-1220(0), Singapore cargo price is 1220-1240(-10). On news side, spots inventory continuously increasing in the bonded area; SHFE inventory slightly increased 1769 tons to 228612 tons, including inventory futures increased 3910 tons to 161480 ton. As the year comes to an end, the policy rumors recurred; partial capital overreacted. The global commodity price went low again in the weekend, the tracking twenty two commodities Bloomberg Commodity Spot Index dropped to the financial crisis level in 2008-2009; concern from market on Fed hike interest rate under slackened global economy growth was exacerbated; USD index approaching to 100 point again. Overall, market capital sentiment tended to weak; fundamental on rubber was weak and, spots enterprises sold on rallies.

Yesterday PP futures opened low and went low; opened at 6291 and ended at 6181; trading volume decreased 121,000 lots to 1.12 million lots; holdings increased 14480 lots to 410,000 lots. On spots side, yesterday domestic PP market price downward moved. Slumped oil price hammered the practitioners’ mindset; petrifaction enterprises as Petro China North China reduced the cost price; bolster on supply weakened; market quotation set new low; transaction price on wires in North China broke RMB 6300/ton.
Intraday main quoted prices for wires of north, east and south markets are RMB 6300-6400/ton, RMB 6400-6600/ton and RMB 6700-7000/ton, respectively.
As for operation, current moving average system arranged in short, MACD green column extended; downward trend accelerated; recent price was estimated to continue weak.

                                                                     Dong LV (Investment Certificate NO. TZ008452)