Daily Report 290416 2016-04-29
Macro Economy
Domestically, according to Bloomberg news, China is now soliciting opinions on the pilot scheme of Credit Risk Mitigation Instruments, considering about carrying out CDS and CLN. The background of this action is as follows. First, the credit risks of bond individuals have stood out since 2014, and some material bond defaults took place. Effective management of credit derivatives instruments and diversification of risk are in need. Second, the PMI of manufacturing industry in April will be released at 9 am on May 1st by the National Bureau of Statistics. The data needs to be followed closely and it is expected to increase to 50.3 in April from 50.2 in March, above the 50 threshold for the second straight month.

Thursday copper market trading and investing momentum was thin; copper price fluctuated narrowly. The Fed claims keeping interest rate stable, which form pressure on US dollar and bolster copper price. But copper market still performs cautiously, and waits for guidance from April PMI data. Back to copper price, LME spots discount increased $3.75 to $14.25, and storage turned to reduce 1475 tons. Domestic spots discount was discount RMB 150-100 yesterday; downstream is willing to buy at low price, but restricted by tighten capital, real trade volume is limited. From supply side, First Quantum Minerals first-quarter copper output sharply increased 23.85% to 119000 tons. Because output of Sentinel increases gradually and other mines operates well. It is expected to produce copper 536000 to 556000 tons, and Sentinel is the main source of output increase, and expected output is 135000 to 155000 tons. Technically, we tend to copper price is on track to downward trend. As for operation, we recommend to find opportunity to short.
Domestically, DCE soybean night section rallied; oil against meal ratio is 2.34:1. Most northeast production area price stays stable; price of part districts increased RMB40/ton. Now Heilongjiang filtered grain purchase price is RMB 3600-3700/ton. Future market long and short factor exist together; long factor might from fundamental side of supply and demand; in production area of Northeast China and districts along Huai-River, surplus grain reduces. North China surplus grain ratio is about 15% to 20%, and Anhui, Henan might be less than 10%. Tense supply is expected to bolster price at the bottom.
From soybean meal side, spots market remain stable, downstream demand part is mainly in observation; market trading is flat. Domestic soybean meal follows US market, under the circumstances of South America rain causing harvest delay, US soybean export gets opportunity; hence the price is under bolster, and recent tendency is mainly in fluctuation and upward. As for operation: reduce soybean meal long holdings and, arbitrage between oil and meal observe temporarily. Control position before holiday.
Nature Rubber
Yesterday Shanghai rubber called back at high point, up to spots trading period: domestic spots price is 1480-1510(-30); domestic cargo price is 1460-1480(-40); US RSS spots price is 1650-1670(-50); US RSS cargo price is 1680-1720(-70); mixed rubber price is 11500-11600 (-100).
From news side, BOJ keeps unexpected quiet, Japanese yen creates the biggest increase of six years. Haruhiko Kuroda claims to increase easing at all dimensions. China will release April PMI at Sunday; manufacturing industry is expected to increase for the second straight month. Overall, three Futures Exchanges adjusted trading commission fee and margin of many contracts, and noticed risk control; market enthusiasm dropped after market short and long momentum both decreased; tendency was estimated turned to strong volatile from unilateral upward trend.
Yesterday PP futures opened low and went low, opened at 7095 and ended at 6897, trading volume decreased 228000 to 1.136 million lots, and holding decreased 13634 to 574000 lots. From spots side, yesterday PP market continued stabilizing, and part of traders are slightly discount RMB50/ton to make a deal. Although overnight oil price continues upward which increases bolster to cost, futures opens low increases cautious feelings of investors. Some traders sell with profit surrenders. Downstream enterprises purchasing is still weak, and dealing is after demand; investing and trading momentum is low.
Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6900-7100/ton, RMB7000-7200/ton and RMB7000-7150/ton, respectively. As for operation, current moving average system twisted, and the tendency was in fluctuation. Recently commodity market fluctuated abnormal with high risk; we recommend observation.
                                                                        Dong LV (Investment Certificate NO. TZ008452)