Daily Report 030316 2016-03-03
Macro Economy
US stock market raised yesterday, benchmark stock index again set the eight-week-high; bank sector and energy sector raised for the second straight day; economy data improved which boost the confidence. S&P 500 index ended increased 8.1 point or 0.41% to 1986.45 point. Yesterday released data showed ADP released US enterprises February employments increased 214,000, was higher than expectation. Recent initial jobless claim and other data continued lower, four week moving average system as well was in a downward tendency. From seasonal side, February non-agriculture employment is usually better than in January. Overall, the official non-agriculture employment data release in Friday has a huge probability in bullish, we predict it may over 200,000. Fed's Beige Book indicates most US regional economic continues expanding but, discrepancy of salary growth is huge. San Francisco Fed president Williams indicated Fed rate outlook might change after March meeting, it would still on track to interest rate hike and would not implement negative rate. From Europe side, ECB executive committee member Coeure indicated central bank focused on the risk of negative interest rate would damage banks’ profitability, meanwhile stick to the commitment on taking implement price stability as priority which again paved the way to the easing measures in March. Overall, this Friday non-agriculture data will be released and, this month ECB, Fed and other important institutions will convene decision-making meeting which will disturb the market, need to pay attention on volatility risk before and after the policy released. In addition, China February Caixin service industry PMI will be released intraday, this data need to be focused.
 
 
Copper
Wednesday copper price raised and, domestic shorten cut the holdings. Except for the reason on China stock market soared had driven the market, expectation on US economy growth increased was as well the reason. Back to copper market, LME spots premium decreased $4.5 to $7.5, inventory decreased 2025 tons. It’s worth noting that recent China import loss is about thousand RMB, merchant premium as well sharply decreases but, LME inventory is still decreasing which is a bullish factor. We focus on the variation on Chinese inventories. Tuesday Chinese spots discount were still at RMB 190-110, holders continued bolstering the price and, consumers stayed in observing. After import got resistance, we focused on the variation of domestic fundamental side. Since reluctant to sell out and receive the reserve, whether March domestic spots market turned to tighten was the crucial point on if copper price continue rallying. From upstream news, Peru is still the main growth point on copper mine, the first quarter output increased 40.6% year-on-year. In addition, Codelco indicated would avoid cutting output by reducing costs; above factors were all in the expectation. Poland KGHM copper industry write-down exceeded the expectation and, indicated would change the construction project of Victoria mine.
Overall, copper price performed in strong, recent copper price rose over resistance and, might challenge the high point in the future. LME is at $5000 and, domestic in RMB 38500/900.
 
 
Soybean
Soybean No.1 contract continued rallying, oil against meal ratio dropped back to 2.424:1 turned in to downward tendency. Current market demand was weak since the price continued dropping, no matter plants or merchants dared not to rashly stock goods; this imbalance between supply and demand would continue in a short term and would drag the price continue dropping.
From soybean meal side, domestic soybean meal spots price were mainly in stabilizing, partial areas and oil plants were mixed with up and down around RMB 10-20/ton. Domestic oil plants operation ratio had back to normal level; import soybean supply was sufficient and, partial oil plants showed meal bolster recently, drove the soybean meal market stopped dropping temporally. As for operation: we recommend soybean No.1 contract take reference at 3400-3600; arbitrage between oil and meal short the oil against meal ratio, which is long meal and short meal, position ratio is five lots meal with two lots oil.
 

Natural Rubber
Yesterday Shanghai rubber opened high and went high; US spots market was sharply stronger: domestic spots price 1130-1140 (+50); domestic cargo price 1150-1160 (+50); US dollar RSS spots price 1300-1320 (+40); US dollar RSS cargo price 1320-1330 (+50); RMB mixed glue price 9100-9300 (+300). Overall, the macro factors drove the industry to rally, under the circumstance of overseas output decreased and, domestic stopped delivery, the US dollar spots merchants quotation followed to rally; we predicted short term price would continue in strong.
 
 
PP
Yesterday PP futures opened high and went high; opened at 6620 and ended at 6746; trading volume decreased 80522 lots to 1.721 million lots; holding increased 22970 lots to 656,000 lots. On spots side, yesterday domestic PP market price rallied RMB 50-100/ton, partial areas in north china raised RMB 150/ton. Sinopec north china, south china, central china increased producer price and, futures continued strong momentum which bolster the spots price rally trend. Plants in downstream purchase enthusiasm were better than earlier, receiving and trading in appropriate amount had improved.
Intraday main quoted prices for wires of north, east and south markets are RMB 6300-6450/ton, RMB 6500-6600/ton and RMB 6600-6800/ton, respectively.
As for operation, current moving average system arranges in long; MACD red column extends as bullish pattern; recent tendency is expected to continue strong.
 
 
                                                                            Dong LV (Investment Certificate NO. TZ008452)