Daily Report 280416 2016-04-28
Copper
Wednesday copper price rallied after drop, closed down. The Fed announced keep interest rate stable on April conference as market expected, and cancelled the statement of “global situation threaten US forecast”; also claimed that US economy saw mixed results. The June interest hike probability shown by the federal fund rate futures is 21.1%. Back to copper market, LME spots discount declined $1 to $10.5, and storage turned to reduce 275 tons. Domestic spots discount was discount RMB 180-100 yesterday, and trade was improved. From supply side, Antucoya copper output was 157000 tons first-quarter, increased 7.3% year-on-year. That is because Zaldívar first time full-quarter production and increasing output of Antucoya offsets the decline output of Centinela and Michilla. Antucoya copper output increases this quarter, and is predicted to reach full-capacity in the middle of the year, which is 50000-55000 tons this year. From released seasonal report, Las Bambas, Antucoya and other copper mines are increasing output; supply pressure is increasing. Technically, we recommend waiting for the new opportunity to short after the end of rally.



Soybean
Domestically, the motion of DCE soybean price rebound is insufficient, oil against meal ratio is 2387:1. Domestic soybean short term tendency is still strong, because the amount of basic level high quality soybean is thin; what’s more, farmers are enthusiastic about planting soybean which boosts the price of weeds. These two factors support Northeast soybean price keep strong. From soybean meal side, part of spots slightly increases RMB 10-20/ton. Trade volume doesn’t increase much, and downstream demand side is cautious to enter market; port oil plant quotation was around RMB 2500-2650/ton. Now oil plant pressure is not high, and is willing to bolster price. Soybean port pressure will show progressively to oil plant at mid May, hence the price may go down. As for operation: reduce soybean meal long holdings and, arbitrage between oil and meal observe temporarily.



Stock Index
Yesterday the market index continued the slight shock. At this point, there is few big news in the market, and all sorts of good and bad news in the early days has already been reflected on the index. The central government has stated that by 2020 the North-East China will achieve significant breakthrough with regard results in key fields and links, on the basis of which overall revitalization will be achieved within another 10 years. The profit of industrial enterprises continues to rise up to 11.1%. But it seems that the market is insensitive to the recovery of data.
Firstly, this kind of rising data boosted by stimulation is not benefit to restructure, and is at the cost of long term development. Secondly, financial statements released late April are mostly not good. Profitability of enterprises and operational capacity totally went down, conformed with low investment repay situation. Thirdly, the increase of inflation and default will increase market risk premium.
But recently stock index is low, and easing credit and fiscal stimulation policy won’t end soon; economy downward risk has been contained temperately. Motion of drop is not efficient. Technically, the recent low point is the high point at the 19 February and the 7 March; bolster exists, we recommend operate with fluctuation.



PP
Yesterday PP futures continued fluctuation at high point, opened at 7150 and ended at 7100, trading volume decreased 392000 lots to 1.364 million lots and; holding decreased 25826 lots to 587,000 lots. From spots side, yesterday PP market continued stable and upward trend, and part of prices are RMB50/ton higher than normal. Price of SINOPEC east China, south China and Petro China east China, south China regions has been risen constantly, raises the bolster for costs. But futures opened high then dropped largely made investors’ pessimistic attitude more serious; it’s limited for traders to follow the increase trend. Downstream factory order can’t follow, and purchase power is weak, which resists the price going up; trading and investing was in stalemate. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6900-7100/ton, RMB7000-7200/ton and RMB7100-7200/ton, respectively. As for operation, current moving average system changes to upward; MACD forms golden cross, which is rebound tendency. Recently bulk commodity rose systematically, whether upward tendency will continue still need observation; we recommend notice risk and keep observation.
 
                                                         Dong LV (Investment Certificate NO. TZ008452)