Daily Report 180716 2016-07-18
Last week three exchanges inventory increased 30000 tons to 476000 tons. SHFE increased 15069 tons, LME increased 142000 tons and COMEX climbed 1070 tons. Last week LME spot goods kept discount situation; Friday slightly narrowed $1.5 to discount $17.5. From supply side, since miner supply is loose, copper mine processing fee is at the highest point, which reached $103 at the first-half of July. Technically, recently copper price is under adjustment after rushing high, and the resistance price of LME at $4880 and domestically at RMB 38000 determined whether rolling back space will open. As for trading operation pay attention to stop-profit according to real situation.

Domestically, DCE soybean followed overseas section fluctuation. Oil and meal strength changed following market rally and rolling back. Oil against meal ratio tendency is not sure. Spot goods side, national inventory soybean begun auction last Friday, and almost all have been traded; average price was RMB 3356/ton, a little lower than recent spot price. We consider this has bad effect on spot market. Market expectation auction amount is 0.48 million tons, which will be sold out before October. From this perspective, domestic soybean price keeps stable. Oil plant operation rate is not high. But soybean meal trading is declining at the same time, which makes soybean meal inventory overstock. Recently, South China raindrop caused bad effect on soybean meal sales of several districts, and downstream breeding demand is under observation atmosphere. Middle-term can go long at low point.

Last week PP futures fluctuated sideways. Upstream side, till Friday night, FOB Korea propylene average price is $707.5/ton. Operation side, now operating rate is about 80.2%, which is flat with last week. Spot goods side, last week price rolled back. Futures market dip, and market confidence is not enough. Sinopec decreased output price. Traders are willing to sell, and downstream factories are cautious to accept goods. Trading and investing atmosphere is cold. Intraday main quoted prices for wires of north China, east China and south China markets are RMB 7900-8000/ton, RMB8150-8250/ton and RMB8150-8250/ton, respectively. Recently average system has the signal of changing. MACD green column lengthen, which is rolling back tendency.

Stock Index
Last week stock index rushed high, and reached high point at April. Recent days, securities, bans, military industry, aviation section launched. De-capacity of steel is at force. This rally is under the background of insensitive of macro data decrease and supply-side reform settled for main line. Since the beginning of May authorities claimed supply-side reform; President Xi raised ‘rejuvenate nation through science and technology’, and the State Council surveyed private investment. Chairman Xi points out in July that we need to stay firm in the reform of state-owned enterprises as well as supply-side, rendering the market reassured. The reform of state-owned enterprises and the resolve of over-capacity will be carried forward. Meanwhile, various pilot project s of central enterprises are fully underway. The reform will be better not worse. Moreover, the market holds some expectations over the interim statements.
                                                               Dong LV (Investment Certificate NO. TZ008452)