The Dalian Iron ore had given up its late gains overnight and closed unchanged on the day this morning. The Doji star had indicated indecision in the market and warned we could potentially see some form of market pullback in the evening session. Price has held resulting in the offshore contract moving 1 dollar higher to USD 119.60 +0.34%. The driver for the upside move is more than just a COVID-19 vaccine or a new president, Steel prices continue to push high, if the margin is there the Iron ore will follow. We highlighted on the morning offshore technical that we are due a correction on the intraday and it should be considered as countertrend and we continue to maintain this view.
Yesterday’s gains were short lived today with the physical market falling flat in the Pacific resulting in the Dec futures giving back 6.2% of yesterday’s 7.1% gain. The Dec contract closed at USD 14,475 with the Q1 closed at USD 8,400 -2.9% and the Cal 21 at 13,150 – 1.1%. the weak close has potential repercussions for the morning as price has closed below tomorrows daily pivot point. If we do not tick up in Asian hours, then we have the potential for more selling pressure on the open.
Panamax followed the Capes lower which is not unusual. The futures were relatively rangebound after the initial sell off with the Dec closing at USD 9,525 -1.8%, the Q1 21 USD 8,200 at 1.8% whilst the Cal 21 held up the best at USD 9,687.5, – 0.4%. Inactive in the physical with the capes under pressure put a top on the market for now leaving all eyes on the EU open. If we stay at USD 9,475 price will be USD 75 below the daily pivot and vulnerable to technical sellers. However, read the morning reports, momentum is not supporting a sell off suggesting it could get a little whippy on the open.
The Supramax market remains indifferent at the moment. It is down but largely rangebound for the third day on the run. The Dec futures closed at USD 9,300 -0.8%, Q121 USD 7,775 – 1.1% and the Cal unchanged at USD 9,050. Lacking direction and not looking comfortable at these levels as the upside has really struggled to gain a foothold.
Brent futures had a cracker today, A vaccine means no lockdown, it also means higher oil consumption and that showed with the futures being up 7% yesterday and a further 3.2% today, at USD 43.38. Our morning technical note had highlighted that downside moves should be considered as countertrend and this view has not changed. Wave analysis is bullish, and this is feeding through to the technical
Have a good evening
The information provided in this communication is not intended for retail clients. It is general in nature only and does not constitute advice or an offer to sell, or the solicitation of an offer to purchase any swap or other financial instruments, nor constitute any recommendation on our part. The information has been prepared without considering your investment objectives, financial situation, or knowledge and experience. This material is not a research report and is not intended as such. FIS is not responsible for any trading decisions taken based on this communication. Trading swaps and over-the-counter derivatives, exchange-traded derivatives, and options involve substantial risk and are not suitable for all investors. You are advised to perform an independent investigation to determine whether a transaction is suitable for you. No part of this material may be copied or duplicated in any form by any means or redistributed without our prior written consent. Freight Investor Services Ltd (FIS) is authorised and regulated by the Financial Conduct Authority (FRN: 211452) and is a member of the National Futures Association (“NFA”). Freight Investor Services PTE Ltd (‘FIS PTE’) is a private limited company, incorporated and registered in Singapore with company number 200603922G, and has subsidiary offices in India and Shanghai. Freight Investor Solutions DMCC (‘FIS DMCC’) is a private limited company, incorporated and registered in Dubai with company number DMCC1225. Further information about FIS including the location of its offices can be found on our website at www.freightinvestorservices.com