Daily Report 181115 2015-11-18
Macro Economy
Yesterday US stock basically leveled off; energy shares dropped which counteracted the upward momentum from the exceeded expected Home Depot and Walmart performance. Major index mixed with raise and fell, S&P 500 index raised 2.75 point or 0.13% to 2050.44 point. From data perspective, US October core consumer price increased 0.2% year-on-year for the second month, including the consumption as food and energy increased 0.2% month-on-month as well, which was the first raise over three months. CPI and core CPI as well raised 0.2% and 1.9%, respectively, which revealed the inflation was moving toward the Fed target. Meanwhile the data revealed US October manufacturing output increased 0.4% for the first increase over three months. Industrial output unexpectedly decreased 0.2% for the second month. November home builder confidence slipped from the ten-year high point reflected the real estate market was cooling. Overall, the raised CPI was completely in conformity with our expectation; combined with cardinal utility and the condition on November oil price might drop, month-on-month growth might level off or even fell back in the late period. But meanwhile, year-on-year growth might continue current rally momentum. Prior released non-agriculture data had revealed the strong US employment and, the gradually increasing inflation would further providing guarantees on US Fed tighten its monetary policy. The Fed funds futures revealed the possibility of December interest rate hike raised to 66%. On Europe side, German Stadium Hanover was under the threaten of bomb, the soccer game between Germany and Netherlands which German Chancellor Angel Merkel was due to attend in was called off; German policies had arrested five suspects related to Paris assault. French authorities named Abdelhamid Abaaoud as the mastermind behind the Paris terror attacks. The USD and CHF trend revealed market risk aversion still exist but, under the impact from US inflation data and Fed interest rate hike expectation, the gold was still in downward trend. In addition, Fed would release October FOMC meeting minutes on 3AM, 19 November. National Bureau of Statistics of China would release the October residential sales price over seventy large and medium-sized cities at 9:30 intraday morning; prices of newly built homes rose month-on-month in thirty-nine cities in September. Above two data need focus.

Tuesday copper market recouped some of its losses after slumped, copper price fluctuated in the low point. Though it seemed copper price might stop lose, the continued dropping zinc and nickel still hammer the market to a certain extent. LME spots premium sharply increased to $15, inventory turned to decreased 3750 tons. Domestic spots were discount RMB 60 to premium RMB 20, the buying momentum started to enter the market; supply was reluctant to sell out. After copper price fell through $5000, capital hammer on market copper mine sharply increased; news on output reductions and production halts continued. The latest news, Africa Mowana copper mine indicated intention on suspending operations to government, since the copper price had down to a low point over several years, the mine production was unsustainable. Chinese copper smelter had no changes on October copper yield year-on-year, which reflected the hammer on smelter shipment from slumped copper price. We tend to consider the copper market was hard to get rid of weak trend but, the downturn speed from copper price in a short term was too fast, there existed possibility on adjustments. We recommend stay in observing temporarily and wait for the new chance to come into the market.
DCE soybean saw divergence in the night session; price in northeast region edged up, soybean in North China further increasing, spots quotation raised over RMB 4200/ton. DCE soybean No.1605 fell through 3800, keep in the weaken mindset.
Soybean meal spots slightly dropped in partial regions, quotation maintain 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, in volatile for a short-term. As for operation, stay in observing on soybean No.1 contract, arbitrage holdings stay in short meal and long oil as the ratio between oil and meal above 2.2.
Natural Rubber
Yesterday Shanghai rubber dropped after rally; US dollar spots market continued being hammered: domestic spots price was 1180-1200 (-10), domestic cargo price was 1180-1200 (-10), US dollar RSS price was 1200-1220 (-20), US dollar RSS cargo price was 1180-1210 (-20), Singapore cargo price 1210-1230 (-10). The downward trend on commodities in overnight overseas market temporary slowed down, though the expectation on Fed December interest rate hike was digested for days, the US dollar still stand at the top of the risky assets.
Domestic Shanghai index fell to 3600 point after soaring, trading volume in both Shanghai and Shenzhen was 1.27 trillion, volume was plainly higher than yesterday. Overall: market asset sentiment was neutral; the rubber fundamental was weak; price predicted to fluctuate in low point; spots enterprises sold on rallies.
Yesterday PP futures fluctuated in low point; opened at 6204 and ended at 6177; trading volume increased 462,000 lots to 1.58 million lots; holding increased 1698 lots to 412,000 lots. On spots side, yesterday domestic PP market price dropped in fluctuation. Overnight crude oil sharply rallied, PP futures widely fluctuated in low point which shattered the market sentiment to a certain extent. Partial petrifaction regions reduced cost price which further weakening the bolster to market cost. Merchants extended the profit surrender for promoting trading, mainly operated in low inventories. Plants in downstream still purchase on own demands; market reserved momentum was thick; trading mainly in low price supply.
Current main quoted prices for wires of north, east and south markets are RMB 6200-6300/ton, RMB 6250-6500/ton and RMB 6600-7000/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)