Daily Report 180516 2016-05-18
Tuesday copper market was under adjustment, and price resist at average 10. Tuesday US data is good. New house opening rate is soaring. Industry output is higher than expectation. CPI rises again to 1.12%. Core CPI is 2.1%. Market predicts US economy of second quarter will recovery increase intense. Two Fed presidents in favor of interest hike also boost US dollar. Back to copper price, Monday LME premium decreased $2.5 to $2, which is the lowest recently. Storage increased 2275 tons to 157000 tons. LME spot goods premium show market weakness. Domestic spot goods discount is RMB 80-40. Traders are unwilling to sell, and customers are mainly observing. From supply side, Cerro Verde under America Free Port first quarter copper and copper mine output increase is doubled from 48500 to 123000. Newly released output causes pressure on copper price. Technically, copper price is resistant at average 10, and may continue roll back.

Domestically, DCE night section rallied with overseas section; soybean meal leaded the rose, and oil against meal ratio was 2.12:1. From spot goods side, Northeast China soybean increased RMB 295/ton cumulatively from mid April till now, and average price increased from RMB 3545/ton to RMB 3840/ton. The decreasing surplus grain is the main reason of price increase; Northeast grain traders still chase high now, but the increase of level price has no significance. Now North China is during spring sowing, and the purchasing and selling is deadlock. Farmers are busy sowing and not willing to sell grains. From soybean meal side, most spot goods market is stable; port oil plant quotation is around RMB 2880-2950/ton. Market is full of observation atmosphere, and dealing is weak. From mid and long term, as a result of overseas section strong tendency, and domestic cultivation recovery situation is good. DCE soybean will continue fluctuation upward situation following US market. Hold long position after call back, and be cautious about short position. As for operation, soybean long position can be held, and arbitrage between oil and meal observe temporarily.

Stock Market
Yesterday stock market fluctuated narrowly; rushed high then fall. The existing fund plays game and the trading volume in the two exchanges remains in the downturn. The trend of stock prices has transformed from universal rise into polarization. From reform side, President Xi: Unswervingly push forward the supply-side structural reforms; expand the middle-income groups. Currently still bearish overall. Firstly, CSRC claims cross-border mergers and acquisitions policy has not changed. But with the strict supervision of the CSRC, and funds leaving the virtual to the real is also more obvious; care of index signs are not very clear, which is to remind the market bubble, the middle and long-term appraisement of middle and small value section and concept section is on the downward trend. Secondly, the central bank doubts April M2 plummeted, emphasizing prudent monetary policy has not changed. But April menstrual industrial data goes down, and credit data fell sharply. The wind of stimulate has changed. After a quarter’s increasing funds volume, and the current correction, state of the economy has returned to its original state. Thirdly, Large-cap stocks are subject to the macroeconomic structure, the quality of corporate earnings, can hardly cheap, is difficult to say now is the time value of the investment. Fourthly, nowadays credit default events increase, bond issue size decreased, which bring essential risk to economy and stock market. The intense of rally is lack and we recommend a downward tendency.

Yesterday PP futures fluctuated at low point; opened at 6721, and ended at 6694. Trading volume decreased 11892 to 0.667 million lots, and holding increased 11416 to 520000 lots. From spot goods side, yesterday domestic PP market fluctuated within the range of RMB 50/ton. With most Sinopec bolster the market, dealers profit surrender space is limited; overnight oil price increasing to the high point bolsters cost, but futures market opens low and went downward, which stresses on the market. Traders sell with market price. Downstream factories purchase as needs; storage follows order. Market totally investment and trading atmosphere maintains the same. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6800-7000/ton, RMB6800-7000/ton and RMB6750-6950/ton, respectively. As for operation, current moving average system twisted, and the tendency is fluctuation; focus on performance around average 60.
                                                                                  Dong LV (Investment Certificate NO. TZ008452)