Indecision is creeping into the DCE iron ore futures. A Doji star followed by a spinning top is warning that upside moves could fail to hold at these levels. The intraday futures produced a negative divergence on the close of the 31st, resulting in the evening session trading 13 RMB lower.
Rebar futures remain corrective; leading the Iron ore futures lower, as market buyers step back to protect steel margins, which continue to hold above CNY 300 (Bloomberg). Iron prices look to be lagging the Rebar futures, suggesting we have the potential to see further selling pressure in the near-term. However, steel prices look to be corrective and not bearish at this point, meaning we may not have seen the end of the current bull cycle in the ore futures. The weakening onshore futures has resulted in the December offshore futures moving lower, down USD 1.41 in the afternoon session to USD 127.95 with the Jan futures closing the session down USD 1.37 to USD 124.75.
The Capesize futures followed through on Friday’s weakness with continued lower pricing on the back of the Baltic Capesize index ending four days of higher pricing, to print USD 91 lower to USD 12,621. The December futures opened USD 300 lower at USD 12,70,0 where they spent the bulk of the day before closing at USD 12,675, down 2.5%. A similar pattern in the Q1 futures, opening bid and offers suggested pricing could be unchanged from Friday before a fading of bids on the European open resulted in prices be 2.5% lower to USD 7,900. Further down the curve the Cal 21 closed the day 0.8% lower at USD 13,100.
Big volume changed hands last week in the December Panamax futures between USD 10,700 – USD 11,000, as the market entered an accumulation distribution phase. The index produced a bearish day as it touched Fibonacci resistance which would support the divergences that are being witnessed in the December futures. Price ended the day 1.2% lower at USD 10,650 with the Q1 futures closing the day nearly 4% lower at USD 8,062, having seen technical rejection last week. The Cal 21 futures remain corrective but in bullish territory at USD 9,775, 1.4% lower. To see the technical report please follow the link Panamax Technical Report https://fisapp.com/wp-content/uploads/2020/11/FIS-4-PAGE-TECHNICAL-REPORT-PANAMAX-30-11-20.pdf
Supramax futures followed the rest of the freight complex lower today with the futures gapping down on the open as market buyers continue to fade. The December futures have entered a corrective phase to close the day at USD 10,550, 2.8% lower. Unlike the Panamax Q1 futures the Supramax Q1 fared better, with price closing 1.5% lower at USD 8,150. The Cal 21 ended the day 1.8% lower at USD 9,062.
Brent futures started the week on a sour note before climbing back to finish the day 1.4% lower at USD 41.51. This week it is about OPEC, which is struggling to reach a deal on oil output (Bloomberg) making tomorrow a challenge when it becomes OPEC and friends. If production cuts are not extended, then the near-term future could be bleak. COVID optimism can drive a market so far but oil buyers will need to see vaccinations and increased consumption very fast; otherwise it could be back down to the market lows if production is increased. Whatever we see technically will have no bearing on the next few days as the market looks for an outcome.
Have a nice Evening
Data source FIS and Bloomberg
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