Daily Report 290116 2016-01-29
Macro Economy
US stock market benchmark index ended high in the overnight market; energy stock rose in a leadership under the stimulation of soared oil price; S&P 500 index increased 10.41 point or 0.55% to 1893.36 point. From data side, US December durable goods orders decreased 5.1%, exceeded the 0.7% expectation which means the possibility of fourth quarter GDP data, schedule to be released at Friday might be poor. Last week initial jobless claim decreased from 294,000 in last week to 278,000, expected was 281,000; December existing house sales increased 0.1% month-on-month, was lower than expectation. November data down revised to decrease 1.1%. Overall, manufacturing industry was still the weakness sector in current economy reviving trend and, was likely to further dropping.
On domestic side, Chinese Prime Minister Li Keqiang talked with IMF president Lagarde at 28 January that China had no intention to promote exports by devaluated monetary, RMB exchange to a basket of currencies was basically stabilizing and, the fundamental on continuously devaluation was inexistent. From present stage, US delay the rate hike had created an opportunity for RMB exchange rally momentum, still emphasized devaluation fundamental inexistent seemed farfetched. In addition, at 9: 30 intraday evening US will release GDP data, expects to increase 0.7% month-on-month, this data needed to be focused.
Thursday copper price volatile in high and showed the sign on retracement. Overnight crude oil was still strong; since it was said Saudi Arabia tabled a proposal of decrease 5% output. But Saudi Arabia denied this news; whether crude oil can come into output reduction remained unknown, we tended to consider crude oil price might volatile in low. Reaction from copper market was small, from spots market perspective, LME spots premium increased $3.5 to $9.75, and inventory continued increasing 925 tons. Shanghai copper spots discount extended RMB 25 to discount RMB 190-100. Along with Spring Festival is coming, downstream starts to taking holidays, China copper consumption is thin made copper price lacks of reviving momentum. On fundamental side, Kazakhmys PLC copper output in 2015 decreased 3% to 79,000 tons and, there is new project go into operation in 2016. Anglo-American copper output is 708,800 tons, decreases 5.3% and, expects to decrease 11% to 600,000 – 630,000 tons in 2016. Technically, copper price shows sign on fall back; we recommend waiting for the buying opportunity after the adjustment.
DCE soybean slightly weakened in the night session, trading pace started to slow down; oil against meal ratio was 2.32:1. Domestic soybean market trading was thin, along with the buying and selling subjects exited the market, each merchant’s activity sharply decreased and gradually came into the close market condition. We regard soybean No.1605 contract will mainly in volatile in weaken trend. For soybean meal market, concentrated stock up at terminal is about to an end, spots price are stabilizing, demand on price supporting still exist; trading and investing is in cautious at present stage, partial asset leaves the market. Quotation of oil plants at port is mostly among RMB 2600-2650/ton. Oil against meal ratio is volatile stronger. As for operation, we recommend holding light arbitrage positions between long oil and short meal.

Yesterday PP futures fluctuated in high, opened at 6196 and ended at 6176; trading volume decreased 526,000 lots to 1.215 million lots; holding increased 1896 lots to 716,000 lots. On spots side, yesterday domestic PP market price showed rallying out of stabilization. Partial regions of petrifaction increased producer price which enhanced the bolster to market cost. PP futures operated in high point and continued boosting merchants’ sentiment. Most merchants quoted high following the trend; plants in downstream gradually finished own stock up, market trading turned to thin and, observing momentum was thick.
Current main quoted prices for wires of north, east and south markets are RMB 6300-6500/ton, RMB 6350-6550/ton and RMB 7200/ton, respectively.
As for operation, current moving average system gradually formed bullish pattern; MACD red column extended as bullish trend.
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