Part A: Review (2018/12/3-2018/12/7)

From December 3, 2018 to December 7, 2018:the closing price of iron ore futures I1905 contract on Friday was 475 yuan, 20 yuan higher than the closing price of the last trading day of last week. The highest price for this week is 481.5 yuan/ton, and the lowest point is 448 yuan/ton.

This week (2018/3/26-2018/12/7), the total volume of the main contract was 4,625,732 lots, an increase of 529,662 lots from last week. After the close of trading this Friday, the open interest of the main contract was 534,350 lots, an increase of 54,272 lots from the last trading day of last week.

Notes: The main contract refers to the futures contract with the maximum open interest.

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 December 7, the inventory of imported mines at 45 ports was 138.60 million tons, a decrease of 1.75 million tons from last week.

Among them, the Australian mine inventory was 77. 28 million tons, down 970,200 tons from last week; the Brazilian mine inventory was 31.58 million tons, down 753,400 tons from last week.

The stock of lump ore was 15.43 million tons, a decrease of 480,900 tons from last week; the inventory of pellets was 2,548,000 tons, an increase of 80,100 tons from last week; the inventory of iron concentrate was 7,524,200 tons, a decrease of 95,500 tons from last week.

(2) Available days of steel mill inventory

As of November 30, the average available days of imported iron ore stocks in domestic

large and medium-sized steel mills was 26 days.

2. Capacity utilization rate

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

76.31%, down 0.58% from the previous week and up 2.32% year-on-year; blast furnace ironmaking capacity utilization rate was 78.81%, down 0.5% from the previous week and up 5.33% from the previous year; Steel mill profit rate is 78.54%,up 1.62% from the previous week; the daily average molten iron output was 2,202,100 tons, a decrease of 15,900 tons from the previous week and an increase of 147,200 tons year-on-year.

Part C: Transaction Summary

Since March 26 and up to December 7 closing, China iron ore futures’ cumulative trading volumes is 330.01 million lots and the cumulative amount of transaction is 15.70 trillion yuan.

Average daily turnover of 1,896,618 lots (2018/3/26-2018/12/7). Open interest declined steadily, with 2,224,492 lots on March 26th and 944,786 lots after the closing of December 7.

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.

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