The December Iron ore futures had a bit of a rebound overnight with price closing 1.09% higher. The rebound has been attributed to lower Brazil shipments and Bloomberg intelligence stating that price will likely stay strong before year end, as steel output remains at high levels. Steel margins remain solid and unchanged at CNY 300 with DCE iron ore testing the will of market sellers in the evening session, before close flat to the morning session. Shanghai Rebar futures are starting to have a wobble and this needs to be watched as it could put pressure on the Margins. Iron ore is holding in there but continues to look vulnerable.
The front-end Capesize futures did not follow yesterdays Cal 21 upside move. We noted that momentum needed to see a clear shift higher it if was to support any form of bull move and this is not happening. Price opened with weak momentum below the daily pivot point and has spent the bulk of the day trading around the USD 12,650 level, where it eventually closed. The Q1 futures followed in the footsteps of the front month, closing 3.4% lower at USD 7,925, whilst the Cal 21 gave back yesterday gains to close 1% lower at USD 12,975.
The technical has been asking questions of the Panamax futures for a few days now but the intraday price had remained bid. This changed on the open with price moving lower. Buyers kept stepping in to support the market but there is no upside push coming now; momentum is weakening on the intraday meaning we could see the turn come into play this morning. Price is unchanged on the day on the back of market buyers pushing the closing price higher. Tomorrow will be interesting, if we remain here, we will open on the pivot point. Upside moves will need momentum support to be confirmed, market sellers have the upper hand as the RSI is already in bear territory, signaling weakness. Further down the curve the Q1 closed 2.3% at USD 8,500 and the Cal 21 -0.6% lower at USD 9,937
Supramax
Supramax futures came under early pressure in the late Asian session before pushing higher on the European open. However, with the Capesize and Panamax both fading the Supramax soon came under pressure to close USD 75 lower on the day. The Q1 futures closed 1% lower at USD 8,350 with the Cal flat on the day. Unlike the Panamax the Dec futures are still holding in bull territory making for an interesting open tomorrow.
On the 13th we were calling for another upside move in Brent with Monday being the day for the bulls, this proved to be correct. On Monday we targeted USD 48.61 as our upside target, the futures have now traded to a high of USD 48.03. Up USD 5.40 in 7 trading days. Now we called the move as being technical, based on Elliott wave analysis, would it have got there without the continued COVID vaccine cheer, or the U.S. presidential transition? That is an impossible question to answer. What we do know is that it has not traded at USD 48.61, if it was a good enough call on the 16th, we will stick with it. Yep, we are saying that downside dips are likely to find buying support based on intraday wave analysis.
Have a nice evening
Data source FIS and Bloomberg
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