Part A: Review (2018/12/17-2018/12/21)

From December 17, 2018 to December 21, 2018:the closing price of iron ore futures I1905 contract on Friday was 497 yuan, 15 yuan higher than the closing price of the last trading day of last week. The highest price for this week is 499.5 yuan/ton, and the lowest point is 482.5 yuan/ton.

This week (2018/12/17-2018/12/21), the total volume of the main contract was 4,808,336 lots, an increase of 402,098 lots from last week. After the close of trading this Friday, the open interest of the main contract was 708,458 lots, an increase of 106,992 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 21, the inventory of imported mines at 45 ports was 138.85 million tons, an increase of 0.56 million tons from last week.

Among them, the Australian mine inventory was 76. 65 million tons, down 325,700 tons from last week; the Brazilian mine inventory was 32.96 million tons, down 127,300 tons from last week.

The stock of lump ore was 15.36 million tons, a decrease of 217,900 tons from last week; the inventory of pellets was 2,875,700 tons, an increase of 94,200 tons from last week; the inventory of iron concentrate was 7,674,000 tons, a decrease of 164,900 tons from last week.

(2) Available days of steel mill inventory

As of December 14, the average available days of imported iron ore stocks in domestic

large and medium-sized steel mills was 24 days.

2. Capacity utilization rate

This week, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 75.26%, down 0.93% from the previous week and up 1.86% year-on-year; blast furnace ironmaking capacity utilization rate was 77.79%, down 0.34% from the previous week and up 4.01% from the previous year; Steel mill profit rate is 77.33%; the daily average molten iron output was 2,175,400 tons, a decrease of 7,700 tons from the previous week and an increase of 112,400 tons year-on-year.

Part C: Transaction Summary

Since March 26 and up to December 21 closing, China iron ore futures’ cumulative trading volumes is 342.35 million lots and the cumulative amount of transaction is 16.30 trillion yuan.

Average daily turnover of 1,860,588 lots (2018/3/26-2018/12/21). Open interest declined steadily, with 2,224,492 lots on March 26th and 992,012 lots after the closing of December 21.

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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