Daily Report 111215 2015-12-11
Macro Economy
Yesterday US stock market stopped three days downward trend; energy and airline sector rose in leadership; S&P 500 index increased 4.61 point or 0.23% to 2052.23 point. On US side, last week initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 282,000, the highest level since early July, but still close to forty years low level. November import price decreased 0.4% month-on-month, expected was decrease 0.8%. November budget deficit was $64.6 billion and, last year was $56.8 billion at the same period. But from mid-long term perspective, along with military expenditure reduction and welfare policy reform, US financial condition was continuously improving. On Europe side, Bank of England maintained the benchmark interest rate at 0.5% record low, voted by 8-1, indicated low oil price and weakly payment growth would further containing the inflation. Swiss National Bank kept the deposit interest rate at -0.75% record low and, committed intervening foreign exchange market if necessary. SNB president Jordan indicated Swiss franc was still under substantially overvaluation and, didn’t exclude the possibility of another interest rate decrease in the future. ECB executive board member Mersch indicated, central bank can stay in easing after Fed interest rate hiked; management Committee member Liikanen indicated, central bank was prepared to take more measures if necessary. Overall, the approached Fed interest rate hike and, the continued easing policy on non-US currency was the hotspot of market attention recently. But this series of events were already over speculated, after practically increased the interest rate, the US dollar index might adjust in medium-short term. In addition, National Bureau of Statistics of China will release data at 1:30 on Saturday afternoon, November total retail sales of consumer goods is predicted to increase 11.1% year-on-year; November industrial added value predicted to increase 5.7% year-on-year; January to November non-agricultural fixed investments predicted to increase 10.1% year-on-year. These data shall be focused.
Under the influence of strong USD and copper mine producer reduced output, Thursday copper price slightly fluctuated. On fundamental side, LME spots premium slightly increased $0.5 to $4, inventory decreased 775 tons. Shanghai copper spots were discount RMB 50 to premium RMB 10, intraday trading was slumped after rallied; supply and demand continued stalemated. On supply side, Glencore indicated if the price further dropped, it would cut more output and, indicated prior announced output reduction plan on copper, lead, zinc was already fully implemented. Glencore had increased deficit-reduction target, tried to reduce its net debt to $18-19 billion, and meanwhile further reduced its previous $5 billion capital expenditure plan to $3.8 billion. The output reduction action from copper mine enterprises bolstered the copper price.
Technically, if LME copper price increases above 4670, next target is $5000. If domestic copper price increases above RMB 34500, next target is RMB 38000. We recommend buying in low point on operation.
DCE soybean was fluctuated; oil against meal ratio continued weakened. Domestic soybean price continued weaken out of stabilized; price lacked of competitiveness. The approached peak season before Spring Festival hammered the price but, current withheld from sale bolstered the price. Under the condition of long-short coexisted, stabilizing tendency might continue for a while. Soybean No.1605 contract focused on long-short watershed at RMB 3800/ton.
Soybean meal spots were stabilized, spots trading were sluggish; basis pricing volume slightly increased. Though domestic demand had revived, spots supply was sufficient in most areas; oversupply pattern still exist which hammered the spots market. Oil against meal ratio was 2.40:1 and, would hover at this level in a short-term. As for operation, arbitrage positions between long oil and short meal can continue holding; spreads between soybean oil and palm oil can pay attention on if goes narrow.

Yesterday PP futures continued fluctuated; opened at 5420 and ended at 5466; trading volume increased 209,000 lots to 1.589 million lots; holding increased 26302 lots to 538,000 lots. On spots side, yesterday domestic PP market price continued dropping. Sinopec east china reduced producer price; spots market was under hammer; trading on low price supply of goods was fine.
Current main quoted prices for wires of north, east and south markets are RMB 6050-6250/ton, RMB 6250-6500/ton and RMB 6550-6750/ton, respectively.
As for operation, current moving average system still in bearish; MACD red column shortens as weaken trend but, it is approaching prior low point recently; MACD curve is gradually forming bottom divergence pattern, downward resistance is huge. We recommend closing prior short positions properly.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)