Upside price action is slowing down on the offshore futures in iron ore. The daily candlesticks are decreasing in size warning that momentum is slowing based on price . However, the trend remains bullish with the evening session trading up to USD 121.15. Steel production remains strong whilst exports are down 6 million tonnes on last week, at 21.38 million tonnes (mysteel). A close on the Dec futures below USD 120.42 would suggest the technical picture is starting to weaken and warn the futures could be entering a corrective phase.
The technical keeps indicating that there is more to go, meaning downside moves could be against the trend. With Chinese growth seemingly once again focused on the construction section we should in theory see a supported the market.
We were worried about the close on the Capesize last night and we right to be, the dec futures were off another 7.4% to USD 13,400, Q1 -3% USD 8,150 and the Cal 21 -1.3% 12,975. Iron ore is moving at records levels but the bulk of the longer -ton mile journey from Brazil is in the VLOC, leaving a market in a bit of a tailspin. Historically the seasonality chart based on the 5- year average should find some respite in mid-November, before selling off again in early Dec (based on Bloomberg seasonality chart). The question is, will it base at these levels, or is there more downside to come? If it goes much lower from here it could be a very depressing December. We close in the same situation as yesterday, if the Dec futures open below the USD 13,525 level, we could see another test to the downside.
Panamax has been more robust than the Capesize sector. However, falling Capes do not make for bullish Panamax futures, from a physical side of the market it will be the owners that are feeling the heat at this point. Dec futures closed -0.8% at USD 9,400, Q1 21 – 1.5% USD 8,075 and the Cal 21 -0.8% 9,625. The Panamax close however have put the futures in the balance, making for an interesting open. USD 9,383 will be the level to follow, bullish above and bearish below, do not forget to read the morning technical to see if we have RSI support.
Supramax started the day below its pivot point and looked like it might be in trouble. However, we did not call it a technical sell on the morning report as momentum was not supporting bearish price action. Happy on this one as the Supra’s seem to have bucked the trend on the front month and front Qtr, with the Dec up 1.3% to 9,425 and the Q1 21 up 1% to 7,850. Not so positive is the Cal 21 that is down 0.8% to USD 8,975. Is the Cal to be the lead indicator again? Let’s see what the big sisters do, as I am not ready to call this one.
Brent continues to love its newfound popular status, with another positive day + 0.6% to USD 44.31. headlines on Bloomberg ‘oil demands shaky recovery revealed in global traffic data’ is not one for the market bulls, however the big jump on the 09- 11 – 20 would suggest this move is still impulse for the time being, meaning we maintain our view that market pullbacks will find buying support. We will put a disclaimer on just in case!
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