Daily Report 190116 2016-01-26
Macro Economy
Yesterday US market was in public holiday on Monday. On news side, Shana, news agency from Iran Oil Ministry quoted Rokneddin Javadi, the CEO from National Iranian Oil Company saying that Oil Ministry had issued order to increase petroleum daily output to 500,000 barrels. According to correlated projections, Iran crude oil capacity might ultimately extended to 3 million barrels per day. Hammer on the crude oil market will continue, US inflation level will still under hammer from medium-short-term and is against a swiftly interest hike from Fed.
On China side, according to PBOC website, Chinese financial institution RMB counterpart of foreign exchange reserves by the end of December decreased RMB 629 billion to RMB 26.6 trillion month-on-month. The website indicated Chinese big four bank December new Yuan loan was RMB 219.865 billion, the total Yuan loan by the end of December was RMB 36 trillion and, Chinese foreign exchange reserves decreased RMB 690 billion in last month. These two data showed the situation on capital outflow was severe. But from recent condition, both central bank intervened exchange market and expectation on US postpone interest hike might stabilized the RMB exchange rate in a short term. In addition, yesterday Reuters has quoted an anonymity report, Gang Xiao, the president from CSRC asked to step down in last week. CSRC indicated in its Wechat Official Account, that the news from Reuters on CSRC president Gang Xiao asked for resignation was inconsistent with the facts and had required to correct it. There is no other news on personnel changes at the regulator level.  At 10:00 intraday morning, China national bureau of statistics would release the GDP data of the fourth quarter in 2015 and annually. Market expectation showed China fourth quarter and annually GDP growth in 2015 was 6.9%. December industrial added value, social retailgoods and non-agriculture fixed investments from January to December will be released at the same time, above data needs to be focused.

Monday copper market got bolster, copper price slightly fluctuated. It is noteworthy that LME copper price slightly increased under the condition of holdings soared 1%, showed recent market bullish momentum was reviving. Monday US market was closed since Martin Luther King Day, Iran announced would increase the crude oil export volume to 500,000 barrel/day; crude oil price opened at gap lower then got bolster at low point. Chinese stock and exchange market stabilized, hammer on the entire market was relieved. Back to copper market, LME spots discount narrowed $4.5 to premium $1, inventory turned to decrease 625 tons. Shanghai copper spots were discount RMB 300 to discount RMB 150, because of enormous import supply of goods, spots were strong but lacked of demand. On supply side, Oyu Tolgoi copper output was 202,000 tons in 2015, higher than expected 175,000 to 195,000 tons; in 2016 was expected 222,000 to 250,000 tons. Intraday morning China will release the GDP data of fourth quarter in 2015 and, a series of macro economy data which need attention.
Technically, LME resistance is at the prior bolster line $4443, if the price rises above the resistance, then copper price revive scope can be opened.
DCE soybean tendency was divergence, soybean No.1 contract continued weakly out of fluctuation. Oil and meal continued rallying, oil against meal ratio further dropped after 2.3:1. Domestic soybean market opened downward trend since January and, northeast soybean dropped the most among which. Current predicament domestic soybean hasn’t been effectively relieved; market trading situation was in long-running stalemate, soybean price was in “dilemma”. We regard soybean No.1605 contract will still in weakly fluctuation under RMB 3640/ton and, this tendency might last until the Spring Festival, hence, stay in observing on operation temporally.
Domestic soybean meal spots price stayed strong, on current domestic soybean meal market, the terminal started to concentrated stock up and all bolstered its price; but sales condition was not as strong as expectation. Partial dealers still purchase and sale in cautious, bear the market. Oil against meal ratio dropped over recent fluctuation lower edge, short tendency tended to downward. As for operation, we recommend arbitrage between oil and meal exit the market and stay in observing temporally.
Yesterday PP futures opened low and went higher, opened at 5640 and closed at 5806; trading volume increased 152,000 lots to 1.575 million lots; holding increased 39938 lots to 614,000 lots. On spots side, yesterday domestic PP market price slightly varied out of stabilization; partial market price slightly higher quoted. Petrifaction producer price was mainly in stabilization which bolstered the market on a certain extent. PP futures opened low then went higher boosted merchants’ sentiment. Merchants shipped following the tendency and observing market’s reaction. Partial merchants tested to slightly quoted high. Plants in downstream was under the influence of collapsed crude oil, lacked of demand on initiatively receive. Market observing momentum was thick.
Current main quoted prices for wires of north, east and south markets are RMB 6050-6200/ton, RMB 6150-6200/ton and RMB 6200-6500/ton, respectively.
As for operation, current moving average system was twisted; MACD golden cross was about to formed, as stabilizing and stronger pattern. But recent macro environment was pessimism, crude oil price fluctuated in low; lacked of speculation to bolster the strong upward trend on fundamental side. Recent trend was predicted to continue adjusting in fluctuation.
                                                                       Dong LV (Investment Certificate NO. TZ008452)