Daily Report 261115 2015-11-26
Macro Economy
Yesterday US stock market leveled off, market trading momentum was thin; investors weighed the mixed economy data and the weakened commodity performance. S&P 500 index was edged down 0.27 point or 0.01% to 2088.87 point. From data perspective, US October excluded aircraft nondefense capital goods order increased 1.3%, set the largest increase range since three months. Overall durable goods order increased 3%. Annualized new housing sales volume increased 10.7% to 495,000 set. The third quarter housing price increased 0.8% month-on-month; increased 5.7% year-on-year. Personal expenditure for the second month increased 0.1%; personal income increased 0.4%. Overall, this data was mixed; though the US economy recovery was still in general, the overall tendency had no changes. The possibility on Fed hike interest rate in December maintain at above 70%. On Europe side, according to Reuters, the central bank officers in the Euro Zone were considering whether to impose a two-stage charge to the cash hoard bank and, whether to buy in more debts even including buy in the repacked bad loans. Officers have some difference on the issues, the president Draghi supported to extend QE but, the German officer refused on it.  Same as the previous, German was still in the main opposite side from the ECB QE but, if Draghi determined to extend QE, German may incapable to stop it. In addition, after the Russia warplane shoot down by Turkey at the day before yesterday, a helicopter was wounded during the search and rescue operation inside the Syria. The current version is the attitude from Russia and Turkey is gradually easing without any signs on escalation. The US had not indicated any too tough statement, the related party is trying to avoid the extension on the affair, and the risk caused by this is predicted to decrease.

Wednesday copper market trading and investing was thin, copper price was in the adjustment. Intraday US dollar index sharply fluctuated. The US data was mixed with good news and bad news, US unemployment benefits sharply decreased; durable goods order increased but, the new housing sales volume and personal consumer spending did not reach the expectation, hence the market considered US would hike interest rate in the end of the year but, the following progress would be slowly, made the US dollar upward trend slowed down. Wednesday copper market spots premium decreased $4 to $12.5, inventory continued decreased 2750 tons. Domestic spots were discount RMB 50 to premium RMB 20, both the supply and demand side was in cautious attitude; market trading and investing was thin. On supply side, Japan Holdings Chile Caserones copper mine failed to achieve the full load production in the estimated time, this copper mine was predicted fail to achieve the annual output target, which was 5021 tons. From the neighboring market side, the nickel price was strong; the news on nickel producer output reduction bolstered the nickel price. According to this, we regarded the current non-ferrous metals was in the period of output reduction after the slumped price, though consumer was poor, the reduction on output would give support to the non-ferrous metals; recent price would perform in the low position fluctuation market.
Technically, copper price is in the reviving trend; if LME rises above $4600 in the future market, the next target will at $4800. If domestic copper price rises above RMB 35000, the next target will at RMB 37000. We recommend operating in long holdings.
DCE soybean continued rallied and, was strong out of the fluctuation. Whether the rally trend would continue depend on the cooperation from external environment. Domestic soybean spots were in the dilemma of increase and decrease; the cleaned grain purchase price in the grain site was generally at RMB 3700-3780/ton, grain after tower filtering price was RMB 3860-3920/ton; grain warehouse purchase price was stabilized in each region. Trade grain in northeast market was hard to export and mainly rely on the grain inventory to digest the soybean; Current rough grain selling price had down to the planting cost, spots further dropping scope was limited. Contract No.1605 long-short watershed was at RMB 3800/ton, operated in light holdings with caution.
Soybean meal spots were stabilized in most regions, partial regions edged up and market was in the reserved sentiment; though the futures price was in reviving, the pattern on strong oil and weak meal was plainly; the meal tendency was still passive. Oil against meal ratio was 2.39:1; the short term tendency was strong. As for operation, long oil and short meal arbitrage holdings can be held.
Yesterday PP futures fluctuated in high point, opened at 6030 and ended at 6015; trading volume decreased 198,000 lots to 1.585 million lots; holding decreased 39246 lots to 267,000 lots. On spots side, yesterday domestic PP market price was in slightly high quotation tendency. PP futures fluctuated in high point which boosted the market sentiment to some extent. Partial petrifaction regions increased the producer price, bolster to the market cost slightly increased. Merchants shipped followed the trend, demand on low price selling weakened. Plants in downstream purchased as demand, trading was mainly rely on the low price supply.
Current main quoted prices for wires of north, east and south markets are RMB 6150-6300/ton, RMB 6300-6500/ton and RMB 6500-6600/ton, respectively.
As for operation, current moving average system was still arranged in shorts, MACD green column shortened as slowed downward trend. Recent geopolitics was in tension and, OPEC announced would take actions on stabilizing oil price, crude oil price probably will volatile. We recommend focusing on the performance at 6000 integer point recently.
                                                                                            Dong LV (Investment Certificate NO. TZ008452)