Daily Report 271115 2015-11-27
Macro Economy
Yesterday US stock market closed for the Thanksgiving holiday, news side was thin. European Commission indicated, the largest scale of refugee flows since Mid-Eastern conflicts and Second World War that Europe was facing and, the threaten from terrorism might dragged the Euro Zone economy recovery. We assumed that threaten from terrorism would drag the Euro Zone economy but, the Euro Zone population growth and the endogenous economic growth was the crucial reason. In addition, Russian President Putin indicated Russia would establish a broad alliance together with French, to attack “ISIS”. Russian Prime Minister Medvedev indicated the government was drawing up economy revenge measures to against Turkey but, all the measures would be complied with WTO regulation; Turkey’s 55% natural gas and 30% petroleum was came from Russia, if the economic sanctions concrete measures involved energy field, it would bring a serious consequences to Turkey in a short term. But according to the current Russian economy condition, this would harm itself as well. Overall, possibility on military conflict risk happened between Russia and Turkey was small, the battle from both side was probably switch into economy field.
From domestic side, according to the report from Economic Information Daily, railway Thirteenth Five Year Plan has been compiled. According to the plan, during the Thirteenth Five Year, nationwide new railway will not be less than 23,000 kilometers; gross investment is no lower than RMB 2.8 trillion. Expanding the railway construction will further shoring up demands and, is contributed to our country’s economy stabilization and recovery. In addition, National Bureau of Statistics of China will release October Industrial Enterprises profit above Designated Size year-on-year data at 9:30 intraday morning, prior data is decreased 0.1% year-on-year, prior cumulative data is decreased 1.7% year-on-year, all shows narrowing tendency. The data need to be focused.
 
 
Stock Index
Yesterday stock index dropped; Growth Enterprises Market fell 2%, lots of medium-small growth enterprises stocks in profit-taking. On news side: President Xi said: fully implement reform strong military strategy, readjust and delimited war zone. The speech might bring continuously bullish to the military sector and, drive the other sectors. After the Thirteenth Five Year Plan released, the expectation on deepening reform expanded. After President Xi mentioned supply side reform on 10 November, the high levels had mentioned it forth. This was different from prior low efficiency investment driven economy, theoretically the determination and action from central government would bring more hopes to the market and, bring continuously bullish to the economy. For the hammer on economy downward trend, current enormous stabilize growth project would further effecting and, effect of fiscal incentive policy would gradually appear. Under the condition of sluggish asset allocation, the economy downward trend eased; the reform had stimulated the market expectation; bolster from below was stronger. But the hammer from above was too large; index upward trend still need to continuously digest the pressure. We recommend staying in long out of fluctuation, buying momentum need to wait the short point.


Copper
Thursday domestic and overseas copper dropped after sharply increase and, narrowly fluctuated; copper price still got bolster. Market reported smelting plants would hold meetings for processing charges on Saturday and, would discuss measures on reactions to the copper price. Nickel smelting plants would hold meetings on Friday as well, following with affairs like whether purchase and storage, which would still bolster the copper price. From macro side, the ECB meeting would be clarified on next Wednesday; the US interest rate hike would be clarified on 15-16 December. The US dollar high point fluctuation pattern would continue during this process, which would hammer the non-ferrous metals market temporally. We tend to regard that copper market had already down the bottom, recent fluctuation might extend. On fundamental side, LME spots premium increased $3 to $15.5, inventory further decreased 3125 tons. SHFE copper spots decreased RMB 5 at discount RMB 50 to premium RMB 10. Trading volume shrunk following the raised market. On supply side, since copper price down to the several-year low point, Vedanta subordinated Konkola copper mine in Zambia halted production and cut 2500 pieces contract workers. There was news on, Codelco planned to decrease 20% of Japan copper tinning premium to $ 92/ton. Technically, LME copper price rose to the first target point $4750, which might adjust in a short term. If bolster in the future market was effective, possibility on cooper price rally to $5000 still existed. Domestic copper price resistance line was at RMB 35500 and RMB 38000, respectively. We recommend the long holdings took partial profits and, waiting for the new opportunity for entering market.
 
 
Soybean
DCE soybean was strong out of fluctuation in the night session; domestic market tendency was stable without the leading from overseas market. Grease continued strong revive in the night session, oil meal showed the sign to the ceiling in a short term. Soybean spots in North and South were stabilizing recently; market demand was relatively in stabilizing but, the upward trend lacked of substantiality bullish condition. Soybean purchase price in northeast still focused at RMB 3700-3780/ton, shipping was poor. Soybean spots from ports dropped below RMB 3000/ton under the hammer from the huge amount of port arrival soybean in December. Soybean No.1605 contract long-short watershed was still at RMB 3800/ton, operated in light holdings with caution.
Soybean meal spots increased RMB 20-40/ton in most regions, spots and basis trading volume expanded; basis pricing was flat. It is worth noting that, intraday soybean meal holding slumped which seemed the oil and meal arbitrage holding took profit and closed position. Oil against meal ratio was 2.39:1; short term tendency was hammered at 2.4:1. As for operation, long oil and short meal arbitrage holdings partially stop-profit.
 
 
Natural Rubber
Yesterday Shanghai rubber continued rallied. US dollar spots price rose: domestic spots price was 1120-1140 (+10); domestic cargo price 1130-1150 (+20); US dollar RSS price 1170-1180 (+10); US dollar RSS cargo price 1170-1180 (+10); Singapore cargo price 1180-1200 (0). On news side: European and US was in Thanksgiving holiday, trading and investing momentum was thin. US stopped release data; Europe as well lack of significant economy data to release which made market lacked of guidance in a short term. On domestic side, since regulators surveyed the non-ferrous metals malevolently shorten rumors, metal sector sharply revived. Overall: market asset sentiment was weak; the rubber fundamental was weak; though the mid-long-term bearish trend led by fundamental side was hard to change, kept focusing on short term price rally.
 
 
PP
Yesterday PP futures opened up high and went higher; opened at 6042 and ended at 6223; trading volume decreased 522,000 lots to 1.063 million lots; holding decreased 34344 lots to 233,000 lots. On spots side, yesterday domestic PP market continued upward trend; overall price increased RMB 100/ton. Futures raised for continuously three days had boosted the practitioner’s confidence; partial petrifaction took this opportunity to increase the producer cost, bolster to supply cost expanded; merchants shipped followed the upward trend; there is no lack of partial merchants were reluctant to sell out. Purchase demand from downstream plants plainly increased but, firm offer was still in cautious and, the increased cost supply was excluded.  The actual transaction continued negotiated on each order.
Current main quoted prices for wires of north, east and south markets are RMB 6250-6350/ton, RMB 6450-6500/ton and RMB 6650-7000/ton, respectively.
As for operation, current moving average system was still arranged in shorts, five-day moving average system turned into upward trend; MACD green column shortened as slowed downward trend. Recent geopolitics was in tension and, OPEC announced would take actions on stabilizing oil price, fluctuation on crude oil price increased; yet current fundamental was still in weak trend. We recommend focusing on the performance at 6000 integer point recently.
 
 
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