Daily Report 030516 2016-05-03
Macro Economy
Domestically, China April official manufacturing industry PMI was 50.1, above the 50 mark that separates expansion in activity from contraction for the second straight month, but lower than March 50.2 and expected 50.3. Xinhua News Agency claimed soaring credit is temporary. China won’t use large-scale stimulate plan. From recent situation, after economy is stabilized, it’s not necessary to process easing measures anymore. All the policies especially monetary policy is expected to slow down. Besides, the USA has added the PRC, Japan, Germany, South Korea and Taiwan into its new watch list of unfair foreign exchange behavior, and claiming that RMB should appreciate in the mid-term. Therefore, it is worth paying attention to the probable appreciation of RMB in the near term.


 
Stock Index
April PMI was 50.1, still above the 50 mark threshold. First-quarter social financing volume set new high record, but Xinhua News Agency claimed soaring credit is temporary. It doesn’t mean restart large-scale stimulate plan, which means after economy data is stabilized, stimulate plan might slow down. The Q1 reports have been released. The profit attributable to the parent company increases by 3% excluding finance and insurance industry. The operating revenue grows by 1%. The stabilization of economic data has reflected on companies' operating revenues. Market seems to be numb about data recovery, firstly, this kind of rising data boosted by stimulation is not benefit to restructure, and is at the cost of long-term development. Secondly, the increase of 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; 60 average bolster exists, we recommend operating with fluctuation. But it’s difficult to rally recently.


 
Copper
Tuesday LME copper price was $4997, increased $27 from $4970 before Chinese holidays. Friday copper price rushed to $5073; US stock index crashed and China economy turnaround expectation bolstered the market. But Tuesday LME copper price went down, because China PMI was lower than expected. April PMI is 50.1, lower than March 50.2 and expected 50.4. But it’s still above 50-point mark. But from seasonal side, traditional factor which April as a consumption season hasn’t showed yet. This is coincident with our former finding that consumption has not turned better. In addition, latest data shows that March output of Chile and Peru has largely increased; Peru increased 45.7% to 188000 tons and Chile increased 3% to 48.9 tons. New production capacity is releasing, on 29 April, copper concentrate process cost has increased to $92.1/ton, larger than $82.4/ton at the beginning of the month. This is the highest point of the year and the pressure of copper supply is increasing. Overall, we still recommend the fundamental side is not supportive for the continuous rally trend. As for operation, wait for the signal of the end of rally.


 
Soybean
Domestic, DCE soybean is weaker than overseas section; because the soybean meal is strong and soybean is weak. Domestic section will continue the downward oil plants quotation tendency. Northeast main district soybean price maintains upward tendency, after filtered grain purchase price is RMB 3660-3740/ton. After price increasing this term, Future market long and short factor will exist together. Pay attention to later period surplus grain volume and state reserve soybean action factor.
From soybean meal side, last week spots market maintained strong. Domestic section follows US market tendency. With the increase of future port volume, supply pressure still exits. Downstream demand part is mainly observation; market trading is flat. Recent tendency is mainly fluctuation and upward. As for operation: reduce soybean meal long holdings and, arbitrage between oil and meal observe temporarily.



Nature Rubber
Shanghai rubber called back at high point before holiday, up to spots trading period: domestic spots price is 1480-1500(0); domestic cargo price is 1470-1480(+10); US RSS spots price is 1650-1670(0); US RSS cargo price is 1700-1720(+20); Singapore cargo price is 1520-1530(+10); Thai cargo price 1530-1580(0); mixed rubber price is 11500-11600 (0). From news side, China April official manufacturing industry PMI was 50.1; above the 50 threshold for the second straight month, but lower than expected 50.3. National Bureau of Statistics indicates that factory activity PMI is in expanding period for the second straight months, and the tendency is stable. From the latest statistic data, until the end of April Qingdao bonded area rubber storage declined 1.45% to 244700 tons, which is 3600 tons; decline range is narrowed. For specific storage species, natural rubber declines more, which pull down the total inventory. Synthetic rubber inventory increases, and mixed rubber increases most. Up to the 29 April, SHFE inventory was 297363 tons, including inventory futures 264530 tons. Overall, the overseas spots sector was weak before holiday, and macro atmosphere still optimistic. After Futures Exchanges increased margin, market short and long momentum both decreased and, market enthusiasm dropped ; tendency was estimated turned to strong volatile from unilateral upward trend.


 
PP
Last week PP futures went back after rally. From upstream side, up to Thursday night, FOB Korea propylene average price was $705.5/ton. From device side, current operating ratio was about 88.5%, slightly lower than preceding week. From spots side, spots price was affected by futures price last week, dropped after rallied. Affected by crude oil futures soared at the beginning of the week, market price went high. Downstream factories are also cautious to accept goods, which boost the upward trend. But with the worse trading volume at the end of month and futures market rollback, market atmosphere turned weak. Traders reduce their position, and deal is made one by one. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6800-7100/ton, RMB6900-7100/ton and RMB7050-7150/ton, respectively. As for operation, current moving average system still arranged in long; but price still continuously ended low, upward motion is not enough. We recommend fluctuation trend in the short time.
 
 
 
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