Daily Report 180216 2016-02-18
Macro Economy
US stock market rallied, S&P 500 index rose for the third straight day and, set the longest continuously raise over two months, ended at 1926.82 point, increased 31.24 point or 1.65%. US oil soared 7.93% and ended at $31.43; energy sector increased followed the oil price. From data side, US January industrial output value increased 0.9% was higher than expected 0.4%. Manufacturing industry output value increased 0.5%, set the largest growth from last July. PPI rose 0.1% month-on-month and, expectation was decreased 0.2%. Housing Starts decreased 3.8% which set a lowest level over three months; Building Permits decreased 0.2%. FOMC January meeting minutes shows the decision makers are worried about the threaten from Chinese decelerates, oil price drops and financial market fluctuation which implies the prediction on US growth decreases, inflation and interest rate hike path. Overall, there is no much highlights in the data, meeting minutes is basically conformed to expectation; Fed officers’ concern on market enhance and, start paying attention on economy downside risk; predicts Fed next rate hike plan earliest at June.
From domestic side, PBOC increased housing public accumulation funds account deposit interest rate, unified implemented base on one year fixed deposit benchmark interest rate since 21 February. Hongkong overnight offshore RMB inter-bank offered rate soared 153 basis points to 3.4% intraday which set the largest growth in one month. The offshore RMB slightly weakened after continuously revive since the Spring Festival; we recommend paying attention on the PBOC open market operation situation, the offshore rate maybe still around 6.5. In addition, China will release January inflation data intraday. According to the market expectation, CPI is expected to increase 1.9% year-on-year, in December is increased 1.6%. PPI expects to decrease 5.4% year-on-year, the continuously decrease record extends to 47 months; in December is decreased 5.9%. It is noteworthy that January M2 growth soars and, previous M2 growth as well continues exceeding the target, the financial market bubble is reducing. Current commodity price is in the low point, once the crude oil which representative the commodity price swings, the midterm inflation will raise; be wary on the problems brought by stagflation.


Copper
Wednesday copper price rose in the fluctuation. Iran Oil Minister indicated on the press conference would support the proposal from Doha Round Negotiations to freeze capacity; yesterday international oil price soared over 7%, US oil again stand on $30, after yesterday all line increase in the Asia stock market, Europe and US stock market as well all raised; raised stock market and crude oil price bolstered the copper price. On copper side, LME spots premium decreased $4.5 to discount $0.5; inventory continued decreased 4425 tons. Domestic spots were discount RMB 290 to RMB 200; market supply was sufficient and, was plainly increased compare to yesterday; merchants’ sentiment warming than yesterday. On supply side, Barrick 2015 copper annual output increased 7.2% to 212,000 tons year-on-year which was leveled off with prior predicted capacity; this company predicted copper output in 2016 would be 168,000 – 186,000 tons. Overall, we tend to consider copper price is still in the first quarter reviving trend, we recommend staying in observing in short term and seeking for a good opportunity to enter.


Soybean
Soybean tendency is in overall weak after holidays and, shows divergence between each contract. Soybean No.1 is weak out of fluctuation; oil against meal ratio slightly drops at last night. Northeast soybean market is still under sluggish; though most trading entities hasn’t back to market after the Spring Festival, the scattered quotation is as well in the weak trend; under the influence of surplus grain, spots are expect to further weakening; hence soybean No.1 contract futures weak tendency is predicted hard to change. From soybean meal side, oil plants at coastal region gradually start operating, soybean meal low price spots and basis trading has increased; market observing momentum is still observing. February import soybean port arrival amount decreased, short term supply pressure would plainly relieve; but under the influence from stock up before holidays, oil and meal spots supply will not show tight condition. As for operation: soybean No.1 contract adjusts in low point, we recommend holding lightly in shorts. Oil against meal ratio is 2.415:1, continues holding arbitrage between long oil and short meal.


Natural Rubber
Yesterday Shanghai rubber holding decreased with retracement, spots market price slightly shifted followed it. Domestic spots price is 1050-1070 (0); domestic cargo price 1070-1080 (-10); RSS spots price 1240-1260 (-10); RSS cargo price 1240-1260 (-30); RMB mixed glue price 8400-8500 (-100). On news side: the newest statistical data shows, up to the middle of February in 2016, Qingdao Bonded Zone rubber inventory jumps to 278,100 tons which increases 6.2% compare to the end of January; the newly increased inventory is mainly from natural rubber. Overall: domestic economy data releases concentrated after holidays; investors’ asset short term turnover is frequently; predicts short term tendency is mainly on retracement; median continues fluctuation estimation.


PP
Yesterday PP futures opened low and went lower, opened at 6268 and ended at 6182; trading volume increased 20940 lots to 1.202 million lots; holding decreased 22444 lots to 624,000 lots. On spots side, yesterday domestic PP market tendency shows slightly downward trend. Partial petrifaction implements the list sales policy which weakens the bolster to supply cost. PP futures opened low and went low which shattered the market sentiment. Merchants actively shipped and, slightly profit concessions to reduce own inventory. Plants in downstream haven’t back to operation yet, short term demand is hard to release; market trading and investing momentum is thin.
Current main quoted prices for wires of north, east and south markets are RMB 6200-6350/ton, RMB 6250-6450/ton and RMB 6500-6750/ton, respectively.
As for operation, current moving average system still arranges in long but, MACD red column shortens; recent tendency predicts to continue retracing, we recommend stay in observing.


                                                                    Dong LV (Investment Certificate NO. TZ008452)