Home > Oct 2017 > Oct 18, 2017 DOW all time high and the China Congress FINALLY meeting, Copper 3 year high

Oct 18, 2017 DOW all time high and the China Congress FINALLY meeting, Copper 3 year high

October 18th, 2017

Many have been saying that China would not let the economy falter before the Congress meets. Therefore it was safe to buy and buy the market. WELL, tonight it is starting. It led off with a three hour speech by President Xi pointing out that Houses are meant to be lived in, Corrupt Chinese Biz People can’t hide in other places in the world cuz China will get them and bring them back. AND that commodities will be left to Market Conditions (Which could mean that China won’t come in and buy to support prices?). On this, Shanghai Futures saw a sell off. Futures are up in the second hour of the Europe Session about .10%. Later ECB board members Mario Draghi, Peter Praet and Benoit Coeure will be speaking in Frankfurt; the US Federal Reserve’s William Dudley and Robert Kaplan will also deliver speeches later today. Talk is Trump is going to announce Fed Chair before Nov 3 and Powell is in the lead. Aussie and the Kiwi are dropping also following commodities.

Oct 2017

  • Trading_Nymph

    From Bloomberg…China’s President Xi Jinping said the world’s biggest producer and consumer of almost all commodities will deepen supply-side reforms and stick to the capacity cuts that have shaken up global raw materials markets.

    China’s economy has shifted to a period where high quality is sought, moving away from its fast-growth era, Xi said during his opening remarks at the twice-a-decade National Congress of the Communist Party of China in Beijing. China will continue with its plan to deleverage and cut capacity, Xi said.

    With few specifics on the capacity cuts provided by Xi so far, market reaction in China has been muted. Steel and aluminum futures in Shanghai were down 0.3 percent and 1.4 percent, respectively, as of 1:26 p.m. local time. Thermal coal futures were little changed in Zhengzhou, while state-run China Petroleum & Chemical Corp., the world’s biggest oil refiner, lost 0.5 percent in Hong Kong.

  • Trading_Nymph

    From Berg Supply..Chinese factories shutdown around October 1st in observance of The National Golden Week, a holiday implemented by the government of the People’s Republic of China to promote domestic tourism, allow workers to visit relatives in remote rural areas, and improve the country’s standard of living.

    Though October’s Golden Week is cause for celebration and a welcome respite from work, many factory workers may not have a job to come back to by the week’s end.

    That’s because, currently, thousands of factories across China are facing temporary – perhaps, permanent – closure under the Ministry of Environmental Protection’s pollution-busting campaign.

    As in the past, Chinese officials are providing very little clarification on regulations. This lack of explicit instructions leaves many mills to their own devices, putting them at risk of being shutdown at a moment’s notice. Even after factories are forced to close, there is little word on what they should do to make their operations compliant or how long they will have to remain closed. Supplies further complicate the issue as the agency has little control over material sources.

    Efforts to curb pollution caused by industrial activities have already shuttered many mills in the Northern provinces of China, a trend that is soon expected to spread throughout the southern provinces.

    Areas currently and soon-to-be impacted include the provinces of Jilin, Hebei, Shandong, Henan, Anhui, Jiangsu, Zhejiang, and Guangdong. Guangzhou in the southern province of Guangdong will likely see manufacturer audits in the fourth quarter and into 2018.

    The Ministry’s efforts take aim at manufacturers of low-value commodities which generally generate excessive pollution, especially in light of China’s rapid, often uncontrolled, economic growth. Massive shutdowns and the lack of clear improvement strategies show the government is willing to allow these mills to move outside of China to India, Cambodia, Thailand, and Cambodia so that domestic production might focus on manufacturing goods higher up the value chain.

    Factory audits will mostly focus on manufacturers of decorative home products, such as Christmas ornaments and other holiday decorations, and electronic components, such as circuit boards.

    Chinese factory closures have brought a slump in Asia-Europe and trans-Pacific container trades – meaning cargo rates may increase if shippers can’t fill their containers. Though alternative manufacturing markets may be opening in other parts of Asia, it will still be difficult to match China’s well-established network of factories and suppliers.

  • Trading_Nymph

    From Nikkeii Asian Review..TOKYO — Global copper prices have risen 30% since the start of the year, due mainly to construction demand from China and trading by speculators.

    Three-month copper futures contracts were changing hands at the London Metal Exchange for more than $7,070 a ton as of late Tuesday Japan time. That number is the highest in three years and three months.

    China has been importing more of the metal, according to customs statistics. September saw 430,000 tons enter the county, up 10% from August and the highest level since March.

    “Chinese domestic construction and automotive demand is robust,” said Yoshikazu Watanabe, president of Tsukushi Shigen Consul, a Japanese natural resources consulting firm. Watanabe’s view is shared by many other analysts.

    As part of a sweeping environmental initiative, Chinese authorities are restricting imports of scrap material, which often contains waste products. As a result, demand has grown for copper ingots.

    The surging demand for copper is being reflected in the physical market. Copper inventories certified by the Shanghai Futures Exchange stood at about 104,000 tons on Friday, or about half the reading in mid-August.

    Favorable economic indicators on the eve of the key Communist Party congress beginning Wednesday have also lifted copper prices. The producer price index rose 6.9% on the year in September, China’s National Bureau of Statistics reported Monday, which exceeded market expectations.

    “This is spurring a flow of funds to nonferrous metals, which closely track economic trends, amid high global equity prices,” said Watanabe.

    Copper prices started picking up in the spring until they hit the upper $6,000 range in the summer. However, many believed the upswing would last only until this week’s party congress, driven by government efforts to stimulate the economy. Others saw copper demand waning, and prices dropped in September as a result.

    But as the twice-a-decade congress drew closer, economic perceptions did not sour sharply. Market players deemed it safe to buy copper.

  • panther341

    IBM earnings last night and stock up a chunk today.

    GS earnings yesterday and a beautiful textbook bearish engulfing candle. This goes along with JPM and others from last week.

    NFLX also had a rather bearish day after earnings – the TV guys were spinning it as (1) the stock had run so much going into earnings and (2) the psychological $200 big round number and (3) good earnings were already priced in, so the fact that it didn’t crash is good LOL

    Tonight is AXP, AA, EBAY and UAL – among others.

    UNH and JNJ were both VERY bullish yesterday after earnings, fwiw. If they actually get a healthcare deal done in DC …..

  • panther341