Iron ore Futures continue to trade sideways with the futures close the session in line with the previous two days. Futures prices remains supported after Fortescue metals Group COO reported the current market is strong, as steel production in China continues to grow (Bloomberg). Steel Margins are off 1% as DCE coking coal continues to push higher; However, margins still sit at a healthy CNY 277, suggesting there is no need to panic just yet.
Capesize futures have had a better day having entered bullish territory on the intraday technical yesterday, the December contract is 8.5% higher to USD 13,725 today. Strong pricing on the fronts has resulted in a higher futures curve, with the Q1 6% higher at USD 8,400 and the Cal 21 1.9% higher at USD 13,225. Seasonality charts do support a thanksgiving rally that could potentially run until the first week of Dec, meaning the bull signals are being backed up at this point. Oil’s rally will also have a factor in the recent higher pricing. For more information on the technical report please follow the link Capesize Technical Report https://fisapp.com/wp-content/uploads/2020/11/FIS-4-PAGE-TECHNICAL-REPORT-CAPESIZE-25-11-20.pdf.
The Panamax market remains supported but has run into resistance. The market has found a balance point between buyers and sellers with the December futures spending the day in a USD 200 range, to close 0.7% higher at USD 10,800. The technical is signalling exhaustion meaning sentiment is not going to push the market higher from here. If it is going to go up it is going to need a shift in the physical to lead it, the futures will not lead from here unless the Capesize catch a serious bid. The Q1 21 futures closed the session 0.9% higher at USD 8,575 with the Cal 21 1.3% higher at USD 10,062.
The December Supramax futures climbed another 2.3% to USD 11,000 with the futures remaining in a bull trend, like the Panamax the technical is showing signs that it could soon exhaust. However, unlike the Panamax, the Supramax is seeing continued strong index values meaning the intraday divergences have a higher probability of failing. The flip side of this is the index itself which will start showing negative divergences tomorrow.
Very mixed messages between the physical and the technical, suggesting you should follow the physical until the technical say’s sell, rather than warning of a slowdown.
Brent futures have now hit target at USD 48.61 as predicted, with the futures ending the day 1% higher after a surprise U.S stock draw and vaccine optimism (Bloomberg). Anything that goes up is now on vaccine optimism. We also keep an optimistic view as the Elliott wave count remains bullish suggesting we have had an extended wave 3. In English that means downside moves are likely to find buying support. A technical tomorrow will confirm this.
Have a nice evening