Daily Report 231115 2015-11-23
Macro Economy
Last Friday US stock raised, Nike led the consumption shares to increase. Meanwhile, ECB president Draghi implied would extend the monetary stimulation to boost the US stock, S&P 500 index created the largest weekly increase range within this year. Friday raised 7.93 point or 0.38% to 2089.17 point. Last Friday several Fed officers made speech, New York president Dudley, San Francisco president Williams, St. Louis president Bullard all regarded the US economy was good and, if the economy data keep bullish, the possibility of interest rate hike in December was rather high; it was likely to end the zero interest rate policy recently. The investors should get prepared for the uncertainty from interest rate hike in each year; the interest rate hike rhythm would rely on the data. From Europe side, ECB president Draghi indicated, central bank would take necessary measures to ensure the inflation moving toward the under 2% target. According to Fed funds futures, current market expectation on the possibility of interest rate hike in December was over 70%. Overall, the main trend on tighten US and loosen Europe had no changes. Possibility of US dollar further weakening did not exist; the commodity market might be continued hammered in a long term.

 
Stock Index
Last week entire stock index was revived, mainly because sufficient assets, beyond expected central government reform and easing strength under the sluggish asset allocation. After the Thirteenth Five Year Plan issued, expectation on deepening reform extended; President Xi mentioned “supply side structured reform” twice recently, different from prior low efficiency investment-driven economy, the determination and action from central government showed more hopes to the market, hence the buying momentum in the low point was constantly. Central bank used several measures to stabilize the capital, reduced SLF interest rate in branch offices, the bailout intention was plainly. On market sentiment, momentum was raising and the amount of major clients was increasing. From bearish side: since the news on IPO resumption was released already, the bearish has been digested and, this round new issue scale was not large, predicted would not have huge impact on the major market. Overall, bolster from low point was strong, but hammer from high point was also huge. Index need to further digesting the hammer in the market if want to increase. We recommended keep volatile mindset in a short-term, stay in caution and optimism.
 
 
Copper
Last Friday copper price fell to the downward low point after the revive trend got resisted. From market perspective, earlier China zinc producer declared to reduce 500,000 tons output in the next year had drive zinc price soared 6%, copper price was impact from this trend as well. LME copper price rallied to $4671 once but, the upward US dollar hammered the commodity market again, copper price as well dropped, closed at second low point $4553. Friday ECB president indicated would move faster to boost the inflation and, prior good employment data increased the expectation on US interest rate hike, US dollar was in strong trend again. This might be the largest hammer on copper market. From time perspective, Fed would hold meeting on 15-16 December, pursued US dollar might bolster the US dollar before the meeting, and the US dollar target price was near 101.6. Back to copper market, LME spots premium increased $25.5, last week LME inventory decreased 5975 tons. Domestic spots discount RMB 70 to RMB 10; consumption purchase in low point as own demands. Recent domestic import losses extended, by the slightly devaluated RMB but, hammer from insufficient domestic copper price and funds was as well the reason. Last week three main exchange overall inventory increased 3472 tons, including SHFE increased 1916 tons, COMEX increased 7531 tons. The copper price downturn caused constantly mine output reduction, from cost side, $4250 would be the cost line of 75% enterprises; we regarded there would be a strong bolster near this price. US dollar would lead the market in a short term.
 
 
Soybean
DCE soybean was overall weak, soybean No.1 contract rallied after falling; soybean meal volatile range moving down; pattern on strong oil and weak meal continued. Domestic soybean spots price were stabilized, trading and investing in northeast was poor, partial area was in nominal price; price lacked of conditions for continuously rally in a short term. DCE soybean No.1605 contract remain in weak sentiment after fell through 3800.
Soybean meal spots slightly weakened last week, quotation remain at 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 2.32:1 and, in upward trend in short-term. As for operation, we recommend soybean No.1 contract stay in observing temporally, long oil and short meal arbitrage position can be held.
 
 
Natural Rubber
Last week Shanghai rubber continued dropping with increased holdings, forward contract fell through 10000. US dollar spots market continued downturn. Up to Friday: domestic spots price was at 1150-1170 (-10); domestic cargo price 1140-1170 (-10); US dollar RSS spots price 1180-1200 (0); US dollar RSS cargo price 1170-1200 (0); Singapore cargo price 1200-1210 (0); Thailand and Malaysia plants price 1210-1230 (-10). From news perspective: rubber stock in and out in Qingdao bonded area was active, both stock in and out increased. Stock-out was at 200-400 tons. Stock-in was mainly at 200 tons and 600 tons. Rubber stock in and out from few warehouses reached 1000 tons. Overall, the rubber inventory in Qingdao bonded area was slowly increasing. SHFE inventory slightly increased 2147 tons to 230759 tons; including inventory futures increased 1420 tons to 162900 tons. Overall: market asset sentiment eased; the rubber fundamental was weak; price predicted to fluctuate in low point; spots enterprises sold on rallies.
 

PP
Last week PP futures continued downward. On upstream side, up to Friday night, FOB Korea average price was $570.5/ton. From device side, current PP operation ratio was about 90%, slightly higher than the week before last week. On spots side, last week propylene market continued slightly decreased. Most petrifaction further stock out in lowering price; market mainly in bearish, merchants lacked of confidence to the future market, shipped followed the downward trend. Plants in downstream continued in small orders and buying as requirement; firm offer trading was difficult.
Take wires as example, last week prices for of north, east and south markets are RMB 6350-6400/ton, RMB 6350-6550/ton and RMB 6450-6800/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 weak.
 
 
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