Iron ore is making hard work of its upside push at this point with DCE futures finishing the night session up CNY 6.5 at 692. The offshore came under pressure whilst the DCE was closed with the night session leaving the futures basically unchanged from the previous day’s close.
Rhetoric for iron ore bulls remains unchanged with Vale producing more iron ore than expected in the last quarter with production at 88.7 million metric tons, its best result in almost two years (Bloomberg). Iron ore flow is now undeniably strong suggesting upside moves are likely to be against the trend at this point unless we see further construction projects or perhaps an agreement from the U.S. on their stimulus package.
How does that affect ore? It does not, but if the S&P 500 goes up the Shanghai composite will follow with the bullish sentiment following through to the iron ore market. The odds on it being agreed, based on the last podium performance between the President and the potential president elect, slim.
The Capesize futures have been threatening a momentum slowdown with futures up small on the fronts. Today we saw some more meaningful price action with the November futures up 4.3%, the q4 20 up 3% and the Cal 21 flat at .2%. The index surprised coming in lower than expected at USD – 1,281. However, with talk of better fixings in the Pacific (FIS) the futures remained resilient resulting them closing within USD 200 of the high in the fronts.
The November Panamax is fighting the good fight with the futures rising 0.7% (USD 10,675) into a falling index. However, price action is labouring, with the index down another USD 200 plus today, it is looking like this upside move could come under pressure again if we do not see some form of shift in the physical soon. Further along the curve the Q4 closed +0.6% at USD 10,700 and the Cal 21 at USD 9,962.5 (+0.1%)
It is hard to get excited about the Supramax futures which continue to move sideways in low volume. The index is starting to move lower UUSD 10,704 – USD 37 but the reality it is not moving fast enough resulting in the back end of the curve firming slightly. The Q4 futures were up 0.2% at USD 10,287 with the Cal up 0.6% at USD 9,125. Interestingly it was the Cal move in the Capesize a couple of days back that warned the front-end futures could push up a little. It will be interesting to see if this is the case with Supramax tomorrow.
More headlines about OPEC looking to stem the rot in Brent futures in the hope that the market will see bullish momentum push it higher. Unfortunately, all this has done is put the Brent futures into a holding pattern leaving them up 13 cents on the day. OPEC might not be able to push the futures higher with their rhetoric, but the crafty old fox has made sure that nobody is going to take them on from the sell side at this point. Check.
Have a nice evening