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China Iron Ore Futures Weekly Report (November 26, 2018)

Fang submitted 2018-11-26 08:10:02

Part A: Review (2018/11/19-2018/11/23)

From November 19, 2018 to November 23, 2018:the closing price of iron ore futures I1901 contract on Friday was 497 yuan, 24 yuan lower than the closing price of the last trading day of last week. The highest price for this week is 529.5 yuan/ton, and the lowest point is 496 yuan/ton.

This week (2018/11/19-2018/11/23), the total volume of I1901 contract was 6,607,648 lots, an increase of 1,415,836 lots from last week. After the close of trading this Friday, open interest was 586,168 lots, a decrease of 49,550 lots from the last trading day of last week.

Part B: Market Dynamics

1.Inventory

(1) Port stock of imported iron ore

Under the background of the country's policy of increasing environmental protection

and production limits in various regions, the blast furnace start-up of steel mills has been suppressed. In order to increase the production capacity per unit, steel mills' demand for high-quality mines has gradually increased.

According to the inventory data of 45 ports of Mysteel, as of November 23, the inventory of imported mines at 45 ports was 143.14 million tons, an increase of 0.41 million tons from last week.

Among them, the Australian mine inventory was 79. 90 million tons, down 542,400 tons from last week; the Brazilian mine inventory was 32.8743 million tons, up 667,200 tons from last week. It can be seen that Brazil's high-quality mine inventory is at a low level, and Australia's low-grade and medium-grade mines are at a relatively high level. Therefore, the contradiction between low inventory and high demand of high-quality mines has pushed the price of 65%-grade Brazilian Carajas sinter feed to continue to rise, and the price of 61.5%-grade of Australian PB fines has oscillated at a low level, with a small increase.

The stock of lump ore was 16.39 million tons, an increase of 461,500 tons from last week; the inventory of pellets was 2,465,800 tons, an increase of 58,800 tons from last week; the inventory of iron concentrate was 8,028,900 tons, an increase of 186,500 tons from last week.

(2) Available days of steel mill inventory

As of November 23, the average available days of imported iron ore stocks in domestic

large and medium-sized steel mills was 28 days.

2. Capacity utilization rate

This week, Mysteel surveyed 247 steel mills with a blast furnace operating rate of

77.58%, down 0.81% from the previous week and up 1.86% year-on-year; blast furnace ironmaking capacity utilization rate was 79.23%, down 1.27% from the previous week and up 4.02% from the previous year; Steel mill profit rate is 86.64%,down 4.45% from the previous week; the daily average molten iron output was 2,215,500 tons, a decrease of 35,600 tons from the previous week and an increase of 112,500 tons year-on-year.

Part C: Transaction Summary

Since March 26 and up to November 23 closing, China iron ore futures’ cumulative trading volumes is 315.66 million lots and the cumulative amount of transaction is 15.02 trillion yuan.

Average daily turnover of 1,924,730 lots (2018/3/26-2018/11/23). Open interest declined steadily, with 2,224,492 lots on March 26th and 1,091,954 lots after the closing of November 23.

Because DCE raised the delivery quality standards for iron ore futures at the end of 2017, the volume and open interest of iron ore futures showed a downward trend. Graph: Sum of All DCE Iron Ore Future contracts (2018/3/26-2018/11/23)

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