Daily Report 210416 2016-04-21
Macro Economy
US stock holds the highest point of 4 months; rising oil prices boost the energy sector. S&P 500 index soared to 2111, but dropped and ended at 2102.4 point; increased 1.6 point or 0.8%. US March existing house total sales is 5.33 million, more than expected 5.28 million and 5.07 million in February; month-on-month increase is 5.1%, more than expected 4%. Although the new housing stars data released before is lower than expected, but the peak sales period at this beginning of spring predicts the bright future of estate market. US residential investment increasing tendency over the last year will continue in 2016, stronger employment market, income improvement and financing appeal will bolster residential market improvement. Oil market, Iraq Petroleum Department deputy ministers FayyadAl-Nima indicates that main member and other oil-producing countries will hold a meeting at Russia next month, making effort for freezing production agreement. But Russia Energy Ministry AlexanderNovak claims that Russia suspect that freezing production agreement will make a deal in the near future. But yesterday New York crude oil future increased 3.8% to $42.64, which is the highest point in five months. Failure freezing agreement seems not effect oil price on constantly rising; the effect of commodity price increase caused by oil price to inflation should be continuously focused on. In addition, Euro central bank will release interest rate policy at late 21 April. According to the Bloomberg survey economists obtained, the key refinancing rate stays at 0%, the deposit rate is estimated to be -0.4%, and the marginal lending rate is expected to remain 0.25%, signifying that the three indicators would remain unchanged.

Wednesday copper market trading and investing momentum was thick, copper price continued rallying. Yesterday released EIA crude oil increase storage was 2.08 million barrels, less than predicted 3 million barrels. Yesterday night crude oil price soared, followed by copper price. But compared with surge of crude oil, copper price is still weak. Back to copper market, Wednesday LME spots premium decreased $5.25 to $13.5; inventory increased 1500 tons. Domestic spots discount were discount RMB 150-100; copper supply is sufficient, downstream still under observation mindset and the buyer market is weak and market trading mainly falls on middleman. From supply side, Minmetals Resources first-quarter copper production increased 337% year-on-year to 36000 tons, in which Las Bambas was 31000 tons. During the second half year, rise of copper production will stress on copper price. Technically, we prefer copper price is reviving, and will fall after rising. We recommend waiting for a good opportunity to short.

Domestically, DCE soybean rallied following overseas market; oil against meal ratio declined to 2.415:1 because of US soybean meal rallied. Northeast China soybean spots price ended downward trend and became stabilized, but actually South China market trade volume didn’t increase. Flat trading situation continued and current rising price was driven from rising import price and middleman centralized replenishment; it is predicted that price tendency expected to be strong in the short term, but the range is limited because of supply and demand fundamentals.
From soybean meal side, spots price is increasing nowadays, spots quotation from most oil plants increased RMB 80-100/ton. Though fundamental side hasn’t change, but the soaring domestic and overseas sector causes domestic spots price increases. Soybean meal price uptrend that lasts for 10 days has intrigued traders and the market purchase has transformed form cautious to active. As for operation: soybean meal longing in light volume when price is low; we recommend arbitrage between oil and meal closing out and observation temporally.

Yesterday PP future fluctuated and went downward, opened at 6760 and ended at 6590, trading volume increased 345000 lots to 2.706 million lots and; holding increased 25510 lots to 697,000 lots.
From spots side, yesterday domestic PP market showed fluctuated and dropped, decreasing RMB 100-200/ton. Producer price of SINOPEC east China, south China and Petro China east China, south China regions has been reduced constantly, weakens the bolster for costs; some traders sell with profit surrenders. Downstream enterprises reflect flat, and purchase is cautious; trading is mainly after demand. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6750-6850/ton, RMB 6850-7000/ton and RMB6900-7000/ton, respectively. As for operation, current moving average system changes to downward; MACD exposure downward extended as weak pattern; we recommend recent tendency will continue fluctuation and downward trend.
                                                                           Dong LV (Investment Certificate NO. TZ008452)