Daily Report 060616 2016-06-06
Stock Index
US May newly increased non-farm positions 38000, far away from 160000. RMB increased 400 points, which is stable for domestic capital price. One red line of Tuesday broke though several days short term moving average, previous sluggish was long, then recovery changes market attitude. From bullish side: 1. Goldman Sachs expected probability of MSCI index inclusion A share in June has rose to 70%, blue chips valuations depressions showed. 2. Shenzhen-Hong Kong Stock Connect program is approaching, securities boosted from which and drove the stock index. 3. Xi Jinping emphasized to put scientific and technological innovation at a more important place boosted the growth enterprise market. But intraday soar should not over optimistic, we recommend cautiously optimistic. Because of: supply side reform is the principal line which shows hope on a long term but, enterprises temporarily profit is hard to rise which may hammer the investors’ long term confidence. Attention is on the supply side reform in the future. If policy can give investor stable and positive expectation, then index is still hopeful.

Last week copper price dropped with pressure at the beginning, and rallied with the push of weakness dollar. Last Friday released US non-farm payroll was 38000, much lower than expected 160000. This causes market expectation to US interest hike decreased. US index dropped with news pressure; not only broke former bolster level, but reached lowest 93.855. This produced rally opportunity to copper price. This week will release domestic May import data, CPI, PII and more macro data. What’s more, Yellen will make a speech on 7 June, which should be focus on. Back to fundamental side, last week LME spot goods premium reduced compared with before; Friday is $8.5. Domestic spot goods premium increased step by step. Friday is premium 90 to 140. Influenced by capital intense at the end of last month, trading was weak, but better after June. Last week total storage of three exchanges is 425000, reduced 14000 tons. Reduction was mainly from Shanghai futures exchanges, which is 10000 tons. Supply side, Antucoya, Buenavista and Sentinel will reach full production or commercialized production. What’s more, Cerro Verde, Las Bambas and Constancia in Peru output increased a lot. Supply pressure is increasing. From Shanghai Metals Market, progressing charge last week continued to be around $95-100/ton, which is highest since the spring festival. In addition, BHP and domestic huge copper smelting enterprise signed Escondida copper concentrate long position TC was $100/ton at the second half year. The release of upstream copper mine output will reflect at process cost. Technically, recent copper price has adjusted; as for trading we recommend first observe, and wait for the market to be clear.

Domestically, DCE soybean rallied following overseas section. Oil against meal ratio fluctuated at low point; the ratio still waits to show stable tendency. Spot goods side, national storage soybean is sure to be cancelled again, which continued domestic soybean intense supply. Production area surplus grain continued reducing; price is stable and strong. Northeast China commercial soybean main purchase price concentrated around RMB 3900-4000/ton. Since storage soybean auction is delayed, market fall in observation atmosphere again. Future market will focus on surplus grain supply and national storage soybean auction. Soybean meal side, spot goods price boost by overseas section. Oil plant quotation is around RMB 3100-3150/ton. Now oil factories operating ratio is high; purchase needs are active. Oil plants are willing to bolster the price. Since we hold the opinion of fluctuation and strong tendency for US section, and domestic breeding recovery situation is good, soybean meal is long in the middle term. As for operation, soybean meal long position is held when rollback happens; oil against meal ratio is at the lowest point, and long position can be tried; oil against meal ratio hasn’t turn stable. Arbitrage between oil and meal temporarily observe.

Last week PP futures rallied. Upstream side, till Friday night, FOB Korea propylene average price was $699.5/ton. From device side, current operating ratio was about 81%, slightly higher than preceding week. Spot goods side, last week PP market was stable and tended increase. Sinopec increased price at the beginning of month. Futures price rose, hence traders sold with high quotation. Market goods source is tense, which increased the rising tendency. Downward factories conflicting emotion is high; purchase volume doesn’t increase. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 6900-6950/ton, RMB6900-7000/ton and RMB6900-7050/ton, respectively. As for operation, current moving average system changes; MACD red column lengthen, which is recover tendency. We recommend observe price near average 60.

Nature Rubber
Last week Shanghai rubber fluctuated and ended dropping; US spot market price didn’t change much. Till Friday, domestic spots price is 1220-1240(0); domestic cargo price is1230-1240(0); US RSS spots price is 1450-1460(+10); US RSS cargo price is1530-1540(+10); Singapore cargo price is 1290-1300(+10); Thai cargo price 1320-1330(+10); mixed rubber price is9600-9700(0). From news side, last week Shanghai Futures Exchange nature rubber storage increased 767 tons to 320626 tons. Futures storage increased 3640 tons to 302400 tons. Last Friday US non-farm payrolls were far from expectation. US dollar rolled back sharply. Commodities recovered collectively. Rubber continued slightly rally situation. Overall, nature rubber is in coincidence with seasonal factors. From macro level, main bulk industry is in a rush. Shanghai rubber futures price is predicted to be lower than RMB 10,000, but is technically near the bottom. Short position can be reduced at low point, and overall is a weak tendency.
                                                                                 Dong LV (Investment Certificate NO. TZ008452)