Daily Report 101215 2015-12-10
Stock Index
Yesterday stock index slightly fluctuated; real estate sector got buying momentum. On political side: the State Council indicated registration-based initial public offering is expected to implement within two years; CSRC emphasized would procedure gradually and would not cause a large-scale expansion, which showed slightly bullish to market. On data side: CPI increased 1.5% year-on-year; import downward scope narrowed. It was mainly caused of price element factor, instead of the sign on reviving; foreign trade was still in grim situation, index weakly revived. The central economic working conference will be held in the mid of this month, market expects the easing policy and supply side reform will bring bullish momentum. China’s prime minister emphasized twice on both supply and demand side structured reform recently. Expectation on easing and reform is the crucial bolster for stock market but, there are lots of locked chips in the up scope and, foreign exchange reserves shrunk exceeded the expectation, recent data tends to bearish; market concerns on the economy downturn does not decrease. It is hard for a clarified orientation and, will stay in fluctuation in the mid-term.


Copper
Wednesday copper price closed slightly increased, which driven by the mining enterprises output reduction plan. On macro side, since enterprises reinforced its strength to decrease inventory, US October wholesale inventory decreased 0.1%. Since the inventory data will influence the GDP performance, it is estimated to drag the US fourth quarter economy growth. Yesterday slumped US dollar as well bolster the copper price. On fundamental side, LME spots premium decreased $0.55 to $3.5, inventory continued decreasing 3025 tons. Shanghai copper spots were discount RMB 30 to premium RMB 20; trading was sluggish after rallied in whole day; stalemate pattern enhanced. On supply side, since the commodity price down to several years’ low point, Freeport announced would take measures on it, including decrease energy department capital expenditure, additional cut the copper and molybdenum output. Freeport planned to shut down Sierrita mine, which annual output was 89,000 tons in last year. This action was a part of additional 159,000 tons copper output reduction plan. Before then, Freeport had announced to cut 113,000 tons copper output. Freeport indicated would adjust copper operation plan based on market conditions.
Technically, if LME copper price rises above 4670, next target will at $5000. If domestic copper price rises above 35400, next target will at RMB 38000. We recommend focusing on buy in low point.


Soybean
DCE soybean edged up in the night session; oil against meal ratio continued strong tendency. Domestic soybean would usher grain selling peak season before Spring Festival, the price was still under hammer but, most soybean farmers were in losses currently had bolstered the market; under the condition of long-short coexisted, stabilizing trend would continue for a while. Soybean No.1605 contract still focus on the long-short divide at RMB 3800/ton.
Soybean meal spots edged down in partial areas; spots trading were sluggish, basis pricing volume slightly increased. Though domestic demand slightly recovered, soybean spots supply were sufficient in most regions, oversupply pattern still exist; hammer on spots market was not light. Oil against meal ratio was 2.43:1, short-term tendency was in upward. As for operation, continues holding arbitrage between long oil and short meal; pays attention if soybean oil and palm oil spread narrows.


Natural Rubber
Yesterday Shanghai rubber fluctuated and was under hammer; USD spots quotation had no plainly changes. Domestic spots price were 1110-1120(0); domestic cargo price 1130-1150(0); USD RSS spots price 1190-1220(0); USD RSS cargo price 1210-1230(0); Singapore cargo price 1180-1220(0). On news side: commodity news was deficiently in overnight overseas market; US index dropped under the influence of Euro. On domestic side, yesterday released CPI increased 1.5% year-on-year, which expanded 0.2% compare to October; PPI decreased 5.9% year-on-year, kept the same level for four continue months. The CPI data might have effects on the sensitive period currency policy; continued focusing on other data in November. Overall: market asset mindset is weak; rubber fundamental is weak; though the mid-long-term bearish tendency led by fundamental is hard to change, we recommend paying attention on phased price reviving trend.


PP
Yesterday PP futures fluctuated in low point; opened at 5424 and ended at 5447; trading volume decreased 107,000 lots to 1.38 million lots; holding decreased 1512 lots to 512,000 lots. On spots side, yesterday domestic PP market price mostly went low. Partial petrochemical enterprise guide price dropped; market bearish momentum was thick; merchants shipped in loosen price. Purchase volume from downstream plants had no plainly increase, mainly on small orders and, firm offer was in negotiation.
Current main quoted prices for wires of north, east and south markets are RMB 6200-6350/ton, RMB 6350-6700/ton and RMB 6550-6800/ton, respectively.
As for operation, current moving average system bearish pattern continues; MACD red column shortens, bearish trend continues. Recent crude oil tends to weak and, no improvements on macro economy, possibility on continue weakening is high. Prior short positions can hold on operation.


                                                             Dong LV (Investment Certificate NO. TZ008452)