Daily Report 191115 2015-11-19
Macro Economy
Yesterday US stock market set its largest increase over one month; the Fed meeting minutes revealed the decision makers considered the US economy was strong enough to endure interest rate hike in December; meanwhile, it  emphasized the interest rate would hike gradually in the future. S&P 500 index sharply increased 33.14 point or 1.62% to 2083.58 point. Data revealed U.S. housing starts in October decreased 11%; annualized ratio decreased to 1.06 million pieces, lower than the expectation and set the lowest level from three months. Building Permit increased 4.1% to 1.15 million pieces, expected was 1.147 million pieces. Fed October FOMC meeting minutes emphasized the interest rate hike in December was “probably become appropriate” and, most agreed the interest rate hike step would be gradually. Atlanta, Richmond, New York, Dallas, Cleveland and most Fed presidents indicated the interest rate hike was in the right timing, the Zero interest rate should not last too long. Given the present situation, the interest rate hike had speculated for a long term recently, main asset prices variation, including gold and US stock, had already reflected on the interest rate hike expectation. Price might mainly in fluctuation in a short term. Continue focus on the data perspective in the future, the next time window would be near the non-agriculture in the early December.
On domestic side, China's Prime Minister Li Keqiang chaired State Council executive meeting on 18 November, deployed accelerate upgrading enterprise technology; prompted the industries moving toward semi-high-end; launched implement a batch crucial technical upgrading project; encouraged the bank to launch refinancing; increased technology renovation upgrading and credit availability; supported the enterprises expand direct financing. In addition, yesterday National Bureau of Statistics data revealed, the number of October new commodity housing price and second-hand housing price increased cities had decreased month-on-month, the increase range dropped. The number of new commodity housing price and second-hand housing price increased cities had increased year-on- year. Shenzhen increased 40.5% year-on-year, as the top increased city; Shanghai increased 2.1% month-on-month, as the top increased city. Overall, the month-on-month increase range fell might means this real estate market reviving trend was already in the second half; the year-on-year growth was still increasing, for sale housing inventory was still high in the 3rd and 4th tier cities; the favorable condition in the downstream limitedly drive the investment in upstream.

Wednesday copper market trading and investing was thin, copper price fluctuated in low; the US dollar still in strong made copper price stayed near the bolster line. On copper market side, LME spots premium increased $7.25 to $22.25; inventory further decreasing 3225 tons. Domestic spots were discount RMB 60 to premium RMB 20; slumped copper price attracted the enterprises buying momentum. On supply side, WBMS data revealed, global copper market supply surplus 377,000 tons from January to September 2015; global copper yield increased 3% year-on-year in the prior nine months; demands in China was decelerated at the corresponding period. Since the copper price slumped, Vedanta planed to reduce 25% cost, its yield was 116,000 tons in 2014-2015 fiscal year.
Technically, copper price was fluctuated near the crucial bolster line; LME was $4600 and domestic copper was RMB 34500. Stay in observing on operation and wait for the new chance to operate.
DCE soybean continue differentiation pattern; soybean No.1 contract still hovering below 3800; domestic soybean spots were strong out of stabilizing; North China soybean spots remain in strong; Northeast spots was stabilized under the impact from North China but, the entire market buying and selling momentum was sluggish, the price lacked of conditions to continuously rally in a short term. DCE soybean No.1605 contract continue weak mindset after fell through 3800.
Soybean meal spots were stabilized in most regions, quotation remained at RMB 2530-2580/ton. Live hogs 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 down, the overall condition was still in the volatile downward trend. Oil against meal ratio was 2.2:1 and, in volatile trend for a short-term. As for operation, soybean No.1 contract stayed in observing temporally, arbitrage holdings stayed in short meal and long oil when the ratio between oil and meal was above 2.2.
Natural Rubber
Yesterday Shanghai rubber continued under hammer; US dollar spots market price dropped: domestic spots price at 1180-1200 (-10); domestic cargo price at 1180-1200 (-10); USD RSS spots price at 1200-1220 (-20); USD RSS cargo price at 1180-1210 (-20); Singapore cargo price at 1210-1230 (-10). Overnight FOMC meeting minutes revealed it was appropriate to hike interest rate in December; global commodities were still weak; Shanghai rubber continued hammered by the leading from speculative fund. 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 6158 and ended at 6183; trading volume decreased 221,000 lots to 1.36 million lots; holding decreased 46432 lots to 365,000 lots. On spots side, yesterday domestic PP market price was in weak finishing. Partial petrifaction reduced producer price and, PP futures fluctuated in intraday; the spots market was under hammer. Most merchants continued shipping in reduced profit to maintain operating in low inventories. Demand from plants were slow, the market supply was hard to digest; trading mainly in low price supply.
Current main quoted prices for wires of north, east and south markets are RMB 6200-6350/ton, RMB 6250-6500/ton and RMB 6450-6700/ton, respectively.
As for operation, current moving average system was arranged in shorts, MACD green column extended; downward trend accelerated; recent price was estimated to continue weak.
                                                                         Dong LV (Investment Certificate NO. TZ008452)