Daily Report 250116 2016-01-25
Macro Economy
US stock market S&P 500 index gained its best two-day rally from three months; investors guessed even the Fed hike interest rate, the global central bank would as well take measures to bolster economy. S&P 500 index soared 37.91 point or 2.03% to 1906.9 point. On data side: US December existing home sales volume increased 14.7% to annualized 5.46 million pieces which exceeded the expectation and, the performance set a ten-year best record in 2015. Markit released the US January manufacturing PMI initial value at 52.7, estimation was 51. ECB president Draghi indicated the concern on Euro Zone inflation outlook, central bank had numerous instruments to increase inflation rate and, might re-evaluated the monetary policy. Under the impact from above speech, last Friday Euro Zone exchange rate plainly dropped and once again closed to the last day low point since Draghi implied easing policy. We regard the ECB will release more easing imply according to the economy data performance at Euro Zone in March to guide the market variation as expected; Euro exchange rate will continuously under hammer. For commodity market, last week US oil drilling platform decreased to a new low since April 2010, US oil and Brent oil kept increase range at 7% the whole day under this impact. Though recent oil price was rather low, once crude oil continuously rally in the future, the influence to inflation in each country would be reflected; before and after April would be its significant reflect period. In addition, Fed Monetary Policy Committee would release interest rate decision at 3AM this Thursday, predicted to keep the ceiling of Fed funds rate at 0.5% but, there might be more dovish expressions released, this meeting needed to be focused.
Last Friday copper price revived but, dropped under resistance. Its performance was relatively weak compare to the surrounding crude oil and stock market. The speech about Euro Zone and Japan will introduce the stimulatory policy on last Friday, with the addition of the frigid weather, crude oil price continued soaring which drove the surrounding markets; VIX dropped back to 22 indicated the panic atmosphere slightly relieved. But copper market was lacked of upward momentum. Intraday LME premium increased $2.75 to premium $3.25, domestic was discount RMB 210-150; last week three major exchanges copper inventory increased 10841 tons, including LME increased 4725 tons, SHFE increased 8081 tons. Chinese traditional Spring Festival holiday is coming, market concerns on the insufficient copper consumption during this period. Copper price fluctuates in low level during Spring Festival is an ordinary affair, usually copper price will start to rally a day or two before the China’s market open. Technically, copper price still fluctuated in low level; we recommend waiting for the long opportunity after adjustment.
DCE soybean rallied in Friday night session, recent tendency was still weak; oil against meal ratio was 2.29:1. Domestic soybean market was weak out of stabilization. Heilongjiang 4.0 cleaned grain purchase price was among RMB 3680-3800; recently imbalance between supply and demand was exacerbated at the northeast soybean market, though each grain merchants and enterprises continued purchasing, the buying momentum plainly dropped, and purchase volume was continuously in sluggish. We regard soybean No.1605 contract was hard to have unilateral market before and after the Spring Festival.
Domestic soybean meal spots price slightly increased out of stabilization in this week; current domestic market terminal concentrated stock up continued proceeding, trading was preferably which bolster the price; quotation from oil pants at port was mostly among RMB 2600-2650/ton. But since the South America soybean was about to entering the market, price after holidays would continue under hammer, we recommended pay attention on the rally scope in a short term. Oil against meal ratio was laterally fluctuated recently and, was likely to stronger under the influence of overseas market. As for operation, we recommend arbitrage between long oil and short meal can try to get involved.
Natural Rubber
Last week Shanghai rubber rallied in decreased holdings; US dollar spots price stabilized. Up to Friday: domestic spots price was 1030-1040 (+10); domestic cargo price 1050-1060 (+10); US dollar RSS spots price 1240-1260 (+10); US dollar RSS cargo price 1250-1270 (+10). On news side: recently PBOC continuously releasing the short term liquidity; ECB’s movement and Fed out of bearish calms the fluctuated market in the beginning of the year; stock market, oil price and exchange market shows a series of revise tendency in the weekend but, it is mainly because of the increased overall financial market risk appetite; this week market focus on the Fed interest rate decision in the morning of this Thursday, Beijing time. As for rubber side, the upstream side, domestic halted harvest and overseas was in high yield; the midstream merchant end inventory was in high level, SHFE inventory subtotal at 268395 tons, including inventory futures 11320 tons; downstream tires stabilized operated. Overall: last week the whole commodity market rallied in decreased holdings; Shanghai rubber rallied in decreased holdings and back to the RMB 10000 level again. It is predicted to continue gentle reviving in this week and, the overall interval pattern will be maintained; pay attention on prior concentrated trading area technically.
Last week PP futures rallied. From upstream side, up to Friday night, FOB Korea propylene average price was $560.5/ton. As for device side, current operation ratio was about 88.6%, slightly lower than prior week. On spots side, driven by the rallied PP futures, spots price edged up out of stabilization but, crude oil price continued collapsing, plants in downstream observing momentum was thick and dragged the rally trend.
Current main quoted prices for wires of north, east and south markets are RMB 6050-6300/ton, RMB 6180-6450/ton and RMB 6350-6500/ton, respectively.
As for operation, current moving average system turned to upward, MACD exposure upward extended as stabilizing and reviving trend. But recent macro and crude oil surrounding was poor, the upward scope was limited. As for operation, we recommend trying the long position in light holdings when low.
                                                                             Dong LV (Investment Certificate NO. TZ008452)