The November iron ore futures traded up to a high of USD 117.36 but failed to hold at these levels during the Asian day session, as concerns about increasing supply continue to linger. However, price is up 0.64% from the Singapore close (USD 116.20) but below the USD 1116.76 level that we were seeing on Friday evening, suggesting momentum is still intact having seen the DCE night session close just above the previous day’s open.
Fundamental questions might be asked about the iron ore futures. However, if we see the DCE Jan 21 futures trade above the RMB 804 level; then we could potentially see some bullish follow-through for a couple of days, as traders look to test the willingness of the market bears.
For Capesize the index remains weak, but the futures have started to show signs that we could see some buying pressure come in. the November futures were down 1.5% at USD 16,300 with the Q4 down a similar amount at 1.7% to USD 18,275. The Cal 21 looks to have been the best performer of the day as it closed at USD 13,325, up 1.5%; less sensitive to prompt and indicating that market buyers are looking bolder on the back end as they prepare for a slowdown at the front.
If the index values show any form of a slowdown compared to the previous few sessions, we could see the front-end futures perform a little fightback. Paper is now treading water to see if it is overdone or not. Having led the index for the last 12 sessions, it is now ready to follow.
The Panamax futures witnessed a momentum slowdown on Friday and this has followed through to the current session. The November futures closed + 1% at USD 10,550 with the Q4 at USD 10,600 (+0.8%) and the Cal 21 USD 9,900 (+0.5%). Not the most active start to the week, the index is showing signs that the initial panic is over, down 225 rather than having a 400 handle.
For the November futures it is a case of pricing within USD 300 of the index. If market shorts think we are going to see an index slowdown, we could see a futures rally into a bearish index. The price is stalling but needs to show more if it is to enter a countertrend move.
Down USD 75 on the day for the November Supramax futures, we continue to show sideways action within a bear trend; unchanged again on the Q4 futures and the Cal 21.
An interesting situation for the Supramax, the market (and your writer) believe that the index needs a correction. As you would expect this has been pre-empted by the futures, unfortunately the index is moving sideways meaning market shorts will need to hold their nerve. If the physical/index ticks up the paper could see some short covering. Or it could be a case of the Nov v Dec spread going bid as sellers look to buy time.
For Brent futures it is a case of bullish until the market tells us otherwise. OPEC are trying to get their act together to put in a defensive package, which normally is a case of hoping the headline itself will be enough. For those who are looking at global supply versus COVID – 19 then you should look for the longer-term charts.
The here and now has price holding, with bullish aggregate open interest (Ok, it is a small build, but still). However, my name might not be Ralph Nelson Elliott, Bill Williams, Glenn Neely, or the dozens of other Elliot Wave experts out there. If my name were any of the aforementioned, I would be thinking that we seem to be missing one final wave down on the weekly chart.
Have a nice evening