Daily Report 060116 2016-01-06
Stock Index
Yesterday stock index rallied by the end of market, media reported the national team would come in to rescue the market but it hadn’t been clarified yet. From market sentiment, technically rally after slumped was necessarily. As for the bailout from national team: news on the China's version Tracker Fund before the New Year had failed to stop the index downward trend, hence, index was hard to rally even if national team rescued market.
Reason on slumped index was too optimistic on prior reform; there was no practical bullish except for reform in the entire stock market. But benefits from supply side reform, tax reduction, state-owned enterprises reform need time to take, a new risk might be triggered under the circumstance of capacity reduction. Recent slightly stabilizing and slowly decreasing economy data was because of over slumped instead of stabilized. Establishment on registration system agenda means the prior market evaluation system and operation thoughts need to be changed. In addition with RMB continues devaluation, shows capital sentiment on domestic assets is getting worse. Price will not rally back before the end of downturn.
Tuesday copper price edged up. Intraday US dollar index slightly increased and commodity market was under hammer, but copper market was relatively in strong bolster concerned to China’s purchase on reserves. Tuesday news, the national reserve and logistics center invited copper tenders, planed to purchase 150,000 tons, in consideration of relevant Chinese smelting plants would reduce 200,000 tons output before the holidays,  it is thus clear that Chinese smelting plants were implementing output reduction and reluctant to sale as planned. China is the traditional copper net importer, if purchase 150,000 tons will tense the domestic supply and, global surpluses copper will sharply drop as well. We tend to consider this will be the major driving force on copper price revive trend in the first quarter. On macro side, plunged Chinese stock market in the first trading day of the New Year had hammered the global stock market; current concern on Chinese economy was the crucial hammer on the market. Tuesday China stock market stopped dropping and, if current weakness can be thoroughly shifted need to be clarified. Technically, copper price was in the reviving trend, bolster level was RMB 35700, LME was $4550.
DCE soybean rallied, pattern on strong oil and weak meal continued. Northeast soybean price started to edged down after the New Year, tower filtered soybean export price in Haibei town of Suihua, Dragon town of Heihe, Kiamusze surrounding areas and Baoqing county of Shuang Yashan had broadly slumped, most down at RMB 20-40/ton, showed extremely weakened market demand. Raw grains price was relatively strong in each area but, soya farmers’ sentiment on reluctant to sale had weakened; recent farmers’ inquiries increased and were eager to sell the surplus grain. We consider direction on soybean No.1605 contract is uncertain, the overall tendency will mainly in weakly fluctuation before the Spring Festival. We recommend stay observing as for operation temporally.
Domestic soybean meal spots slightly weakened, soybean import cost increased under the devaluated RMB. Low soybean port arrival amount during January to March and feeding enterprises stocked up before the Spring Festival had brought confidence to oil plant support the price, it was predicted soybean meal spots would resist to drop in a short term and, laterally narrowed adjust in fluctuation. Oil against meal ratio was 2.42:1, showed a sign to reach the top. As for operation, we recommend focus on the ceiling of grease ratio fluctuation interval; arbitrage between oil and meal pay attention to stop profit at the top edge of interval.
Natural Rubber
Yesterday Shanghai rubber weakly volatile after slump, US dollar spots market had no plainly variation compare to yesterday market: 1080-1090 (+30); domestic cargo price was 1100-1110 (0); US dollar RSS spots price 1180-1200 (0); US dollar RSS cargo price 1180-1210 (0). On news side: yesterday onshore and offshore RMB both dropped, previously overseas media had claimed central bank would intervened exchange market; domestic stock market opened low and went high with big fluctuation, over night overseas market risk sentiment barely stabilized; global commodities had no plainly variation; US dollar continue strong. Overall: though overall financial market risk appetite was from slumped stock market and, other negative information as RMB devolution, weakened PMI formed hammer, the risk release in the first commodity market trading day was obvious earlier than stock market, and we consider it was mainly come from the released pressure of prior separated fundamental upward trend, which on behalf of recent strong ferrous & non-ferrous rubber. From present condition, spread swiftly returned; changes on fundamental was small; market might seek for new hotspot on limited weakly fluctuation; we recommend focus on prior concentrated trading area technically.
Intraday PP futures continued volatile, opened at 5770 and ended at 5815; trading volume increased 61974 lots to 1.72 million lots; holding decreased 9056 lots to 573,000 lots. On spots side, intraday domestic PP market price slightly shifted out of stabilizing. Petrifaction producer price continue stabilized, merchants follow the market tendency, no plainly changes on quotation but, most supplies’ practical trading had scope to negotiation.
Intraday main quoted prices for wires of north, east and south markets are RMB 6250-6400/ton, RMB 6400-6600/ton and RMB 6700-7000/ton, respectively.
As for operation, current moving average system twined, MACD red column shortened as insufficient upward momentum. Recent price predicted to continue volatile.
                                                                          Dong LV (Investment Certificate NO. TZ008452)