Daily Report 201115 2015-11-20
Macro Economy
Yesterday US stock market failed to expand the largest upward momentum over one month; the profit warning from UnitedHealth Group dragged the health care shares; energy shares dropped following oil price. S&P 500 index closed slightly down 2.34 point or 0.11% to 2081.24 point after a whole day fluctuation. US last week initial jobless claims decreased 5000 to 271,000 pieces, hovering near the forty-year low point. But from the absolute quantity side, both two data in November was higher than 270,000 pieces, a large gap compared with last month which might indicate non-agriculture in October was hard to continue in high point. Fed Vice Chairman Stanley Fischer indicated Fed was trying to make the global market be prepared for the first interest rate hike nearly ten years, but he as well reiterated the exact time on interest rate hike was not determined. Atlanta Fed president Lockhart indicated, support the first interest rate under the condition of no plainly deterioration on US economy, gradually easing means Fed would not raise interest rate in every meeting. Overall, speeches from Fed officers still have implication on leading the market to an interest rate hike expectation and, Fed funds futures revealed the possibility of December interest rate hike rose over 70%. From Europe side, ECB meeting minutes on 22 October revealed, partial officers would like to easing monetary policy in October since the deflation risk. ECB Executive Board Praet considered the global tail risk including the slowed down Chinese growth was reduced. The possibility on Euro Zone extend QE was high. Main pattern on tighten US and loosen Europe has no change. Most officers including ECB president Draghi and, St. Louis, New York, San Francisco Fed president will make speech intraday, pay attention on it.
On domestic side, PBOC determined to reduce the SLF interest rate in branch offices started from 20 November; overnight and seven-days SLF interest rate adjusted to 2.75% and 3.25%, respectively, aim to seek the effect on SLF interest rate develop interest rate corridor ceiling. This adjustment mainly aimed to smooth short-term interest rate, to reduce the excessive volatility on short-term interest rate; objectively, it continued the substantiality easing policy.
Thursday copper price continued low point volatile but, the volatility narrowed compared to prior two days, showed the sign on stabilizing. Thursday non-ferrous metal market was hammered from the selling momentum led by China Fund, along with the weaker zinc, aluminum and lead. But all contracts recovered lost profits ultimately; the hammered shorts started to close positions as well, which calmed the slumped trend. US dollar retracement was the crucial reason. Several Fed officers made speeches on Thursday, focused on the US interest rate increasing step would be slow and, the final range would be lower than normal level. Back to the copper market, LME spots premium at $21, inventory continued decreasing 225 tons. Domestic spots were discount RMB 50 to premium RMB 10. Though the bearish momentum was thick, enterprises in downstream were still buying on demands in low point. On supply side, Glencore Zambia continued layoff, amounts predicted to reach 4300 people. Its Mopani in Zambia copper mine output was 83,000 tons in last year. Except for Glencore, Zambia indicated, Vedanta, First Quantum and other mining firms as well planned to reduce jobs. Moreover, since the sluggish copper price, Teck Resources declared would reduce $650 million costs in the next year and, would lay off 1000 people; Teck Resources copper output was 333,000 tons in last year.
Technically, copper price would stabilize near $4600, in domestic is RMB 34500. The possibility on copper price revive trend in a short-term is increasing.

DCE soybean was still weak, short-term tendency further moving downward. Soybean No.1 contract back month further dropping; domestic soybean spots were stabilized; trading in northeast was still poor, partial regions was in nominal price; price lacked of conditions for continuously rally in a short term. DCE soybean No.1605 contract continued weak mindset after fell through 3800.
Soybean meal spots price reduced from RMB 20 to RMB 40 in most regions, quotation remain in RMB 2500-2550/ton.  Live hogs breeding stock revived slowly and, demand on fodder was weak; import soybean port arrival amount was huge and the import cost tend to decrease; domestic soybean meal supply was sufficient; winter rapeseed meal demand was in off season; both domestic soybean and rapeseed meal accelerated dropping recently, the weak pattern was plainly. Oil against meal ratio was 2.25:1 and, in upward trend in short-term. As for operation, we recommend soybean No.1 contract stay in observing temporally, oil and meal arbitrage stay in short meal and long oil as the ratio was above 2.2.
Natural Rubber
Yesterday Shanghai rubber price dropped with increased holdings, forward contract fell through 10000 in the mid market but, price rallied in the late market with decreased holdings. No.1601 contract closed at 13075 point, No.1605 contract closed at 10060 point. US dollar spots market further dropping. Domestic spots price was at 1160-1170 (-10); domestic cargo price at 1150-1180 (-20); US dollar RSS spots price at 1180-1200 (-10); US dollar RSS cargo price at 1170-1200 (-10); Singapore cargo price at 1200-1210 (0). On news side: China central bank reduced SLF interest rate to decrease financing cost yesterday; overnight US dollar fell to two week low point; Fed October FOMC meeting minutes did not further deepening market concerns. Overall: market capital sentiment was slightly eased off; fundamental on rubber was still weak, price was estimated to fluctuate in low point; spots enterprises sold on rallies.
Intraday PP futures continued fluctuated; opened at 6180 and ended at 6157; trading volume increased 26290 lots to 1.388 million lots; holding decreased 8886 lots to 357,000 lots. On spots side, intraday domestic PP market slightly fluctuated out of stabilizing. Boosted from futures price rallied in the mid market, market trading momentum was fine. In addition, petrifaction bolstered in stabilized price, merchants shipped following the trend for promoting trading. Plants in downstream purchased in proper, trading and investing was in common.
Intraday main quoted prices for wires of north, east and south markets are RMB 6250-6400/ton, RMB 6350-6500/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)