Daily Report 080416 2016-04-08
Thursday copper price dropped with high volume, LME downward scope up to 2.95%. Yesterday  domestic stock market dived at the close which enlarged the market’s worry over Chinese demand. US dollar shows bolster at the low point, hence copper price is under hammer. On copper market side, LME spots premium slightly dropped $3.5 to $15; inventory turned to increase 3925 tons. Domestic spots discount are discount 20 to premium 20, and spots market trading momentum is thick, but mainly concentrated between traders; actual trading dropped after rallying. From supply side, copper mining industry representative and spokesman made a conclusion on reduce cost to counter current market environment on the annual conference hold in Chile, instead of large-scale reduction. Supply stress occurs when Cerro Verde and Las Bambas increases copper output this year. Technically, copper price breaks through several moving averages bolster level; if resistance of $4670/90 is effective, copper price is possible to drop to the low point in the beginning of the year. Domestic resistance is RMB 36000. We recommend operating in short.

Oil and meal from DCE soybean dropped following overseas market, oil against meal ratio is 2.577:1. Recently, northeast area soybean price continued weakness tendency, high moisture soybean loading price continued at low level, with mainstream quotation at nearly RMB 3600/ton. High quality soybean but without proper price is the common reflection from northeast soybean farmers and dealers, in fact, this is related to the overall decline in food quality. Nowadays there is more wet food which soybean farmers are eager to sell. With soybean of low moisture, high protein accounting for relatively small, it is not enough to drive prices higher. From soybean meal side, spots price edged down in partial area, oil plants quotation was at RMB 2350-2400/ton. Since the second half month, soybean port pressure will show progressively, and cumbered by weak corn price, soybean futures price is not positive; but will not drop heavily in the short term, and difficult to rally. As for operation: fundamental on soybean No.1 contract is weak and, we recommend staying in observing; soybean meal longing in light volume when price is low; short arbitrage between oil and meal operates at 2.62:1. 

Yesterday PP futures opened low and went lower; opened at 6965 and ended at 6817, trading volume increased 236,000 lots to 1.893 million lots; holding increased 57798 lots to 703,000 lots. From spots side, yesterday domestic PP market slightly swung out of stabilization around RMB 50/ton; Producer price of Petro China east china, south china and northeast regions increases, enhances the bolster for costs; but under the pressure from the slumped futures price at the market opening it’s limited for traders to follow the upward trend, and some traders sell with profit surrenders. Enterprises in downstream mainly purchase as demand, the limited trading volume slower the progress on digesting supplies; market trading momentum is flat. Intraday main quoted prices for wires of north, east and south markets are RMB 7400-7450/ton, RMB7450-7600/ton and RMB7700-7800/ton, respectively.
As for operation, current moving average system still arranged in long; but MACD green column extended; price ended down at the negative line for the third straight day, which showed a callback shape. Recent volatile on crude oil increases and, overhauling is increasing; result is difficult to get between long and short, and weak volatility is expected to continue in the near term.
                              Dong LV (Investment Certificate NO. TZ008452)