Daily Report 110116 2016-01-11
Copper
Last week copper market was weak, both domestic and overseas copper price showed downtrend. From major reason perspective, China stock market continuously slumped in the first week of the new year and, RMB exchange rate once devaluated near 2%; concerns on Chinese economy became the global largest risk factor and caused collapse over global financial market. Though US employers added 292,000 new jobs on last Friday, market still focused on the situation in Chinese stock market. China had suspended circuit break mechanism on last Friday and stock market adjusted, but market still expressed concerns about Chinese economy which would be the market largest risk factory in a short term. On copper market side, last Friday LME premium decreased $2.5 to discount $2.5; domestic was discount RMB 230 to discount RMB 140; last week three main exchanges copper inventory increased 11153 tons, including LME increased 1775 tons, SHFE inventory increased 10717 tons. There was news on China State Reserve Bureau had bought 150,000 tons refined copper though a closed-door tender, we were waiting for confirmation from spots market. On supply side news, since the problems on payment, 75% miners from BHP subordinated Cerro Colorado agreed to go on strike on 11 January, output expectation on this mine was 250,000 tons in 2016 fiscal year. Technically, copper price performed in weak, LME would continued testing prior low point $4443 in a short term; hammer on domestic copper price still existed in a short term.
 
 
Soybean
Last Friday DCE soybean was in weak trend in the night session; soybean meal was stronger than grease; oil against meal ratio continued weakening. Variation on soybean No.1 contract spots and futures market was not plainly. On spots side, current domestic soybean export price in Heilongjiang and partial Inner Mongolia area edged down RMB 20-40/ton, though the downward trend didn’t formed a mainstream yet, weakly market supply and demand has plainly showed. We regard soybean No.1605 contract direction is uncertain in short term, the overall tendency before Spring Festival will mainly in weakly fluctuation; we recommend staying in observing on operation.
Soybean meal market was strong, spots price rallied out of stabilizing, weekly increase range was about RMB 20-50/ton. Feeding enterprises stocked up before Spring Festival was predicted to make oil plant support price, soybean meal rallied trend has ended yet; retracement scope was limited in a short term. Oil against meal ratio dropped to 2.34:1 which tended to downward trend in short term. As for operation, we recommend continue holding arbitrage between long meal and short oil.
 
 
PP
Last week PP futures fluctuated in weakness. On upstream side, up to Friday night, FOB Korea propylene average price was $555.5/ton. On spots side, last week demand in downstream plants slowly increased, spots market was under hammer; though petrifaction rose price in the beginning of the month, quotation was limited to rally, market price back to downward trend; especially nearing the weekend, enterprise inventory in supply side hasn’t decreased, four major regions of petrifaction all sell in decreased price.
Current main quoted prices for wires of north, east and south markets are RMB 6050-6200/ton, RMB 6150-6400/ton and RMB 6550-6900/ton, respectively.
As for operation, current moving average system twisted; MACD red column shortened and was about to form dead cross as weak pattern. It was predicted to continue weakening trend recently.

 
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